Wealthy South Australian Shahin family snaps up the state’s BP service station network

Oil giant BP has sold its South Australian service stations to Peregrine Corporation, the owners of the independent chain of petrol stations On the Run, as it attempts to simplify its retail operations in the state.

Peregrine Corporation, which also operates the retail chain Smokemart, is owned by one of South Australia’s wealthiest families, the Shahins, and the purchase is expected to generate $1.2 billion in revenue this financial year.

On Tuesday, BP announced it had reached an agreement with Peregrine Australia for the sale of 12 regional petrol stations and 16 metropolitan stations.

The transaction for the regional sites has been completed, but the sale of the 16 metropolitan stations is subject to approval from the Australian Competition and Consumer Commission.

SmartCompany contacted Peregrine Corporation, but no one was available to comment prior to publication.

BP Australia spokesperson Jamie Jardine told SmartCompany the service stations being sold will continue to sell BP fuel and the majority of staff will be retained by the new owners.

“The transition of staff from the 12 regional service stations sold to Peregrine will begin immediately,” he says.

Jardine says the sale was motivated by BP’s inability to expand sufficiently in the Adelaide market.

“It’s a peculiarity of South Australia, there are 200 petrol stations in Adelaide and of those BP only had 16 company-owned sites, so it’s impossible to grow.

“Even if we wanted to grow, the opportunities are very limited and 16 stations was a relatively small number to own and operate,” he says.

Throughout Australia, BP has 400 stores.

“There are much larger numbers in other cities and we have much greater representation in other areas, compared to South Australia. This sale is a South Australia-only initiative and it simplifies our operations and allows us to focus on areas of growth,” he says.

The transaction is limited to these 28 stores. BP said in a statement it would continue with its other operations in the state including its offshore exploration and the expansion of the Largs North terminal.

Jardine says Peregrine have been business partners with BP for “many, many years”, as the BP have been supplying the On the Run stations with petrol.

Peregrine Corporation chief executive Yasser Shahin told The Australian Financial Review the value of the acquisition was “in the tens of millions”.

In 2010, Peregrine also purchased Mobil’s 29 South Australian service stations, after 7-Eleven acquired the Mobil business.

The On the Run service stations are open 24 hours a day, 7 days a week, and operate on a multi-offer format which sees brands such as Subway and Brumby’s operating in the same location.

The chain of On the Run service stations began in 1984 when Yasser Shahin’s father Fred Shahin purchased a single service station.

“As independents grow, Adelaide now enjoys a fuel price parity to other states, that’s important,” Shahin was quoted as saying in The Australian Financial Review.

“I think scale gives us credibility both in terms of brand and supply scale. It gives us the credibility to challenge Coles and Woolworths. I think this would be the only market where an independent is bigger than the grocers. That’s key,” he says.

In 2011, Shahin won the emerging category of Ernst and Young’s Entrepreneur of the Year awards.