Adds comments from Galp
Portugal's integrated Galp continues to believe in splitting its industrial and customer-focused businesses and seeking a partner for each after failing to agree commercial terms of a potential merger of its downstream business with that of Spain-based Moeve.
Galp's own industrial business, which is focused around its 226,000 b/d Sines refinery, together with the 100MW renewable hydrogen electrolyser and 270,000 t/yr advanced hydrotreated vegetable oil (HVO) and sustainable aviation fuel (SAF) plant due to open by early 2027, is an "investment case", according to Galp co-chief executive Joao Diogo Marques da Silva.
Despite the "compelling strategic rational" for a segregation of the two businesses, size dictates that this should be with the assets of a qualified partner to increase scale and not through a spin-off or separate listing for the business.
"It doesn't make too much sense for us not to have a partnership on the downstream, considering not only the scale, complementary competitiveness, but also the consolidation," according to Marques da Silva, who ruled out retaining 100pc of its industrial business in any potential future downstream partnership.
Galp and Moeve said earlier today that they have broken off talks to merge their industrial businesses, including refining, chemicals, trading and low-carbon fuels into a company controlled by Moeve and combining both firms' customer businesses into a retail company with equal ownership after 10 months of negotiations.
"Following extensive discussions, it was not possible to reach a commercial agreement with Galp. We remain fully focused on executing our transformation with financial discipline and delivering sustainable long-term value," Moeve chief executive Maarten Wetselaar said.
"Galp remains exceptionally well positioned, with one of the most attractive upstream growth profiles in the sector, strong industrial and commercial businesses, and a diversified portfolio encompassing renewable energy and significant trading activities," Galp chairperson Paula Amorim said.
"No deal is better than a bad deal," Marques da Silva said, adding that Galp feels "no pressure whatsoever" to rush into a tie-up in downstream and has "confidence in the standalone value" of its business.
By Jonathan Gleave
