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TOTAL sells off US stake

TOTAL SA pulls back from North American market hostility,sell-out to
Ultramar Diamond (US), expected to be half the size of Tosco

Financial Times, Thursday April 17, 1997 (Christopher Parkes, LA &
Robert Corzine, London),p.2

TOTAL, the French oil and gas (sic.) group, yesterday, yesterday
formally backed the plan by Ultramar Diamond of the US to acquire its
55% stake in its North American downstream assets for $811m.

TOTAL said it would own 8 per cent of the entity that will emerge from
the deal, which marks another step towards Ultramar Diamond's goal of
joining the leaders of the new-look US oil refining and petrol retailing

The deal, announced late on Tuesday, will also help TOTAL to avoid a
possible confrontation with the US goverenment over the French group's
involvement in oil and gas developments in countries such as Iran, which
are subject to unilateral US sanctions. 

TOTAL has consistently denied that the US would have any legal grounds
to act against it. But there has been recent speculation that TOTAL was
keen to lower its US profile, with senior executives publicly noting
that the US operations were small and not particularly profitable.

For Ultramar Diamond, the adition of TOTAL's  three refineries will
boost the company's group's capacity from 400,000 barrels/day to 650,000
b/d, and add 710 wholly-owned and branded retail outlets to bring the
group's total to almost 6,400.

The link was expected to increase cash flow 50 cents a share next year,
with earnings per share about 15 cents higher, said Mr. Roger
Heminghaus, Ultramar Diamond's chief executive.

Rationalisation, probably including redundancies in centralised
functions such as information technology and marketing, was expected to
yield annual savings of $50m.

The company, which joined the US oil industry restructing fray last year
with the merger of Ultramar and Diamond Shamrock, said recently it
wanted to be among the US top three for shareholder return, and incerase
earnings about 15% a year.

While the TOTAL negotations were near completion, Mr. Heminghaus said he
was especially interested in expanding in the northeast, soutwest and
Mexico, where it had a handful of convenience stores but no branded
petrol stations.

With its latest acquisition, Ultarmar is expected to be about half the
size, -- in terms of capacity and retail outlets - of Tosco, the
industry leader.

As international oil majors have focused on oil exploration and
production, pulling out of or merging their refining and marketing
operations in joint ventures, US refiner-retailers have been busy
building critical mass the better to compete in the over-crowded market.

The most prized acquisition targets are companies with round the clock
convenience store chains. TOTAL's retail properties include 560 of these
stores, and have successfully developed profits  sources such as fast

(Total, France's Killer Gas Company in Burma)