Statoil takes High Court case against licensees

Petrol station group Statoil will today open High Court proceedings against two local businessmen over control of one its its stations, reports Dominic Coyle

The case is expected to centre on the licensing agreement signed between the two parties in 1995.

When Statoil took over almost 260 stations run under the BP brand in Ireland in 1992, they included 66 owned by BP and run by licensees.

The Norwegian state-run oil company opened negotiations with the licensees and, in 1995, new three-year agreements were signed.

During the term of those contracts, it is understood that Statoil decided against any further renewal of licensee arrangements. It offered to buy licensees out of the arrangement, with the price determined by the financial performance of the individual stations.

Since then, all bar one of the petrol stations run under licence have returned to full Statoil control. However, Mr Tom McNestry and Mr Noel Flynn have held out since the expiry of the licensee arrangements in 1998.

They are understood to claim that, with fellow licensees, they received verbal assurances from Statoil prior to signing the most recent licence agreements that they would be allowed to hold on to those licences until retirement. This was dependent on regular renewals and fair delivery by both parties under the terms of the licence.

The two men, who run the Statoil station on Rochestown Avenue in south county Dublin, are contesting the right of Statoil to revoke or not to renew the licence.

They are expected to call a number of former licensees as witnesses.

They are also understood to be contending that the company has undermined their business - lowering any payment they might ultimately receive should they decide to accept a buyout offer determined by performance - by forcing it to buy fuel at an uncompetitive price.

Statoil is expected to argue that it entered an agreement with the two men for a licence to operate the station over a three-year period and that it was fully entitled at the end of that period to bring the station back under its direct control.