KUWAIT - The British Market.

KPI entered the UK market in October 1986 when it bought a 10.3% stake in Hays Petroleum Services, giving it control of 821 service stations (although later it reduced its holding to 2.96%). At the same time, KPI took over another retailer Pace Petroleum.

In March 1987 KPI purchased the retail unit of Ultramar for $80m which included Golden Eagle with 465 service stations, as well as a company specialised in the distribution of domestic fuel oil and a unit which supplied diesel to shipping. In May 1987 it purchased the 53 UK stations operated by then Soviet oil trader Nafta, which boosted the total of KPI's retail outlets in the UK to 1,339.

In late 1987, KPI set up Kuwait Petroleum Great Britain (KPGB) to manage its British distribution network. In July 1990 KPGB bought a small firm, Kamper Services, which had 20 stations in the eastern UK. In late 1990 it bought the East Anglia oil terminal of King's Lynn Storage (KLS), with a capacity of 16m litres. The deal provided for the terminal to be revamped and for KLS to continue operating it on behalf of KPGB. In addition to its main Q8 network, KPGB later had 100 independent stations under the Pace brand. But the sale of KPGC's UK network in September 2004 helped KPI retionalise its British operations (as reported earlier on in this DT).

KPI had acquired a small retailer of lubricating oils, Carless Lubricants, in 1989 for $52m, reinforcing its position in that segment of the market. Carless had annual sales of 38,000 tons of oils and greases, representing 4.2% of the UK lubricants market.

Then KPI embarked on major restructuring and rebranding of its UK lubricants business bringing them together in a unit called Kuwait Petroleum Lubricants (KPL), which started marketing products under its own name in October 1990.

In October 1998, KPGP launched a new dealer package for a 400-strong UK network of sites. This was to reduce dealer overheads by using the group's buying power to secure discounts for Q8 dealers.

Also in October 1998, the group distributor unit Q8 Fuelcare announced plans to invest 400,000 pounds sterling in its "super-small" fuel tankers fleet. This was to bring its fleet to eleven 26-tonne rigid chassis vehicles, among the shortest six-wheel tankers ever built. Each tanker featured a highly compact design and small turning circle which provided Q8 Fuelcare manoeuvrability in tight spots.

The vehicle was ideally suited for deliveries of fuel oil to locations such as farms, small industries and domestic customers. The vehicle has a more environmentally friendly approach to fuel transit, storage and delivery.

KPGB in March 1999 unveiled plans to increase its network of UK sites providing an International Diesel Service (IDS) from 75 to 86 by August of that year. The ISD is a fully automated refuelling service for truck drivers in the UK and Europe and this now constitutes an important part of the KPI system in Britain.

In Europe, KPI and its units now have what in 2001 they claimed was the industry's first euro invoicing and information service as well as the first European assistance helpline for truckers.

At the beginning of 2000, KPGB began marketing City Petrol at four of its stations. This was an ultra-low sulphur fuel. Legislation in the UK and the other EU countries was to mean that lower emission fuels such as City Petrol was to become standard by 2005.

There will be further emission reducing refinements before the decade is out. KPI wants its various retail units in Europe to be in a key position in ultra-clean products.

In May 2001, KPGB acquired BP's direct fuels operation in central and southern England, doubling its market share in these areas and increasing the company's overall business in the UK by 25%. Thus expanding Fuelcare's network, the acquisition involved four fuel distributor depots at Banbury, Cambridge, Evesham and Braintree, as well as BP's Heating Services division. Together, these businesses service more than 40,000 household, agricultural and commercial customers and 45 retail service stations.

KPGB's takeover of BP's Heating Services business was a new departure for the Kuwaiti company in the UK. This allowed it to service and maintain customers' heating appliances in addition to providing heating oil.

KPGB has been one of the first to link up with supermarket brand in the UK as supermarkets have tried to maximise valuable trading space by opting for compact, fully automated forecourts. These take up 25% of the space of conventional forecourts.

KPGB's marketing experts have said that, as consumers' familiarity with the technology increases, the number of automated forecourts will grow substantially during this decade.

It is not clear yet as to how the September 2004 sale of KPGB's UK gasoline retailing and wholesale business to Refined Holdings have affected KPI's system in North-West Europe. (Refined Holding groups three British companies: Malthurst, the William Pears Group and Winston Group).

Ernst & Young was the financial adviser to KPI on the sale of KPGB's gasoline retail service network and direct fuel distribution operations.