Deutsche BP Aktiengesellschaft

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Deutsche BP Aktiengesellschaft

Überseering 2
2000 Hamburg 60
Germany
(040) 6395-2162
Fax: (040) 6395-2314

Wholly Owned Subsidiary of the British Petroleum Company PLC
Incorporated: 1904 as Aktiengesellschaft fur osterreichische und ungarische Mineralólprodukte (OLEX)
Employees: 4,199 including affiliates
Sales: DM 9.55 billion (US$6.30 billion; DM 14.06 billion before mineral oil tax)
SICs: 1311 Crude Petroleum and Natural Gas; 1382 Oil and Gas Exploration Services; 2911 Petroleum Refining; 5172 Petroleum Products

Deutsche BP Aktiengesellschaft is one of the top suppliers of petroleum products in the competitively fragmented German market. The company is actively engaged in all facets of the petroleum industry: exploration, crude oil supplies, refining, and petroleum products. Through its affiliates and subsidiaries, Deutsche BP is also involved in petroleum transport and pipelines, a network of filling stations, and the chemical industry. The only companies in Germany with a similar range of activities that are larger than Deutsche BP are Deutsche Shell and Esso.

Although it is a subsidiary of the British Petroleum Company (BP), Deutsche BP has a long history of its own going back to the first decade of this century, and its predecessor was founded a few years before that of BP. Despite two world wars, German and British oil companies had long been doing business with each other. In fact, British Petroleum—originally the Anglo-Persian Oil Company—took its current name from a German oil marketing company, British Petroleum Ltd., which it acquired in 1926.

Deutsche BP’s history began in neighboring Austria, but it was founded with the aim of serving the German market as well. At the turn of the century the Austro-Hungarian Empire’s oil fields in Hungary, Rumania, and Galicia (now divided between Poland and Ukraine) were among the few developed oil fields in the world.

On July 1, 1904, a group of Viennese industrialists founded the “Aktiengesellschaft fur osterreichische und ungarische Mineralólprodukte” (corporation for Austrian and Hungarian mineral oil products) with the initial capital of one million Kronen. This essentially was a corporation to replace a cartel of Austrian refineries, the Exportbüro der österreichischen Petroleum Raffi-nerien of 1902. The board of directors included the leading figures of the Austrian oil and banking businesses. The first president was Robert Freiherr Biedermann von Turnoy, and vice presidents were Oskar Szirmai and Ludwig von Neurath. Its business functions were, as entered in the Vienna commercial register: “Trade in petroleum and its by-products for itself and third parties, especially export; the storage of petroleum and its by-products as well as the rental, acquisition and establishment of reservoirs, storage areas and other facilities for storage and shipment; and the investment in enterprises which operate similar businesses.”

Management of the young corporation was in the hands of a 30-year-old bank clerk, Carl Adler, who had become familiar with the financial interests of the oil industry through his administrative position in a Prague bank. He had also managed the predecessor business, the Exportbüro der osterreichischen Petroleum Raffinerien. Adler employed the next 12 partners. The firm soon became known in Germany, Belgium, Holland, and Switzerland by its telegram address of OLEX, derived from Petrolexport.

Europe at that time represented the largest and most profitable market and the seat of the most intense competition. To compete with the excellence of American petroleum, OLEX’s first task was to standardize the quality of Austrian petroleum. OLEX also sought to follow the American example of becoming a regional business, and thus acquired a series of subsidiaries for marketing its lighting oil in the major German cities: Mainz, Breslau, Düsseldorf, Dresden, Munich, Hamburg, and Berlin. In its first year, OLEX received important assistance from the German regime, which had granted it favorable rail cargo fares within Germany. To take full advantage of the German market, in 1910 OLEX centralized its management at its Berlin subsidiary, OLEX-Petroleum-Gesellschaft mbH, and thus became a German-based company. The following year OLEX became a subsidiary and sales organization for the Deutsche Erdol Aktiengesellschaft (German crude oil corporation).

The primary consumer product derived from petroleum at the time was still kerosene, for which the company also marketed its own brand of lamps. However, it was not long before gasoline and other fuel oils became the major business. In 1922 OLEX opened in Berlin the first modern “fuel station” in Germany. By 1926 OLEX had 1226 gas pumps in service at 1086 filling stations and was planning the construction of another 1000 pumps.

In 1926 OLEX merged with the Deutsche Petroleum-Verkaufsgesellschaft mbH (German petroleum sales company) to become the OLEX Deutsche Petroleum-Verkaufsgesellschaft mbH. It was here that the British became involved. The Anglo-Persian Oil Company (APOC) of London, predecessor of British Petroleum, participated 40% in the new OLEX merger and thus obtained a German marketing organization for its products derived from its own crude oil deposits.

In that same year APOC also purchased another German oil company, a subsidiary of the Bremen-based Europáische Petroleum Union named the British Petroleum Company Ltd. This name, in which the word “British” originally reflected the fact that it marketed the Union’s petroleum products in the United Kingdom, was ultimately assumed by APOC to become the BP of today. Three years later APOC increased its shares in OLEX to 75%. In 1930 the latter changed its name to OLEX Deutsche Benzin und Petroleum GmbH and took over the trademark BP, which by then was being used by APOC. The following year APOC became the sole stockholder of OLEX. This was also a time of great growth for OLEX, which quadrupled its sales between 1926 and 1932.

With the Soviet blockade of Berlin in 1948, OLEX permanently moved its headquarters from Berlin to Hamburg. Two years later its parent, the Anglo-Iranian Oil Company (previously APOC) brought into OLEX shares of two other German petroleum companies, the Europaischen Tanklager- und Transport AG (EUROTANK) and Runo-Everth Treibstoff und Oí AG. The resulting enterprise was renamed BP Benzin und Petroleum GmbH. In 1957 the firm legally changed from a private company to a joint-stock corporation, and accordingly changed its name to BP Benzin und Petroleum Aktiengesellschaft. It kept that name until 1974, when it assumed its current name, Deutsche BP Aktiengesellschaft.

Through the takeover of the Hamburg EUROTANK Refinery (renamed BP Refinery Hamburg-Finkenwerder) Deutsche BP also became a manufacturing company. In 1953 a platforming facility (for petroleum refining using a platinum catalyst) was erected at this refinery, the first such facility in the Federal Republic of Germany. In subsequent decades the addition of other refineries reflected BP’s growth. In 1960 it put into operation the BP Ruhr Refinery in Hiinxe bei Dinslaken, and in 1968 the BP Bavaria Refinery in Vohburg. With a capacity of 4 million tons, the Dinslaken refinery was the second-largest in the country at the time. However, in 1985, as a consequence of the radical changes in the energy market, the processing facilities of the refineries of Ruhr and Hamburg-Finkenwerder had to be closed. These sites continued to function as trade centers, though. Growth again in the late 1980s led to the founding in 1988 of a new refinery enterprise, Raffineriegesellschaft Vohburg/Ingolstadt mbH, as a technical association between BP Raffinerie Bayern in Vohburg and the Erdolraffinerie Ingolstadt AG. In 1991 output was 6.7 million tons annually, over half of which was automotive fuels. The following year work began on expanding the refinery’s capabilities in order to satisfy the growing demand for automotive fuels and to improve their quality, by adding a second catalytic cracking unit and a deisohexanizer (to remove isohexane), a project in which DM 180 ($118.8) million would be invested over the next few years.

Deutsche BP also expanded by investing in the petrochemical industry. In 1957 it participated in the founding of EC Erdolchemie GmbH in Cologne-Worringen, a joint venture with Bayer AG, with each party owning 50%. EC Erdolchemie has since become one of the largest petrochemical companies in Europe. This was merely the first of a number of enterprises going beyond fuel oil production and distribution in which Deutsche BP would get involved. In 1967 BP Benzin und Petroleum acquired a majority share of the Oelwerken Julias Schindler GmbH (later to be renamed BP Oiltech GmbH) of Hamburg from the British Petroleum Company Limited. Subsequently its ownership was increased to 100%. Specializing in motor oils, BP Oiltech has grown to produce one-fifth of all lubricants sold on the German market. BP Oiltech also produces bitumen (a tar for asphalt) used in road building. In 1979 Deutsche BP purchased BP Chemie GmbH (today BP Chemicals) as a wholly owned subsidiary, with activities based in Dusseldorf in the marketing and sales of chemicals, solvents, and plastics. In 1986 Deutsche BP acquired a majority share in Globol GmbH and Globol International Vertriebs- und Entwicklungs-GmbH in Neuburg an der Donau, which is one of the leading manufacturers of household insecticides and hygiene products in Europe.

In the 1970s BP also began to make acquisitions in the plastics industry. In 1973 BP Benzin und Petroleum acquired its first shares of the synthetics manufacturer Alkor-Oerlikon Plastic GmbH in Wasserburg, which later became known as AOE Plastic GmbH. Two years later BP acquired a 50% share of the Polydress Plastic GmbH in Michelstadt/Odenwald, which it subsequently increased to 100% ownership. In 1977 BP acquired the synthetics manufacturer Etimex Kunstoffwerke GmbH in Stuttgart. However, towards the end of 1991 the group of four plastics manufacturers that had made up Deutsche BP’s plastics arm were merged into a single company, BP Chemicals PlasTec GmbH, and ownership was transferred within the international BP Group to BP Chemicals Investments Ltd., London.

Although Deutsche BP has made forays into the petrochemicals industry, it has continued to develop its interests in its core petroleum business. In 1979 the BP-Veba agreement was approved under which Deutsche BP acquired the restructured Gelsenberg AG from Veba, thus breaking up the union of the Gelsenberg and Veba, whose merger in 1974 formed the largest single share in the domestic petroleum market in Germany. The most important holdings of Gelsenberg AG included a 25% share in Ruhrgas AG, Essen; the network of filling stations of Fanal GmbH, Mülheim/Ruhr; the fuel trading firm Stromeyer GmbH, through which Deutsche BP also gained access to the coal industry; and 50% of the shares in the refinery Erdolraffinerie Ingolstadt AG. Its stake in Ruhrgas AG remains Deutsche BP’s principle participation in the natural gas business. In 1989 a trademark agreement was made with the company Merk & Cie KG of Landshut whereby 90 filling stations of the name “Deltin” were transferred to Deutsche BP.

Deutsche BP has also been involved in the supply of fuel oils for commercial transport. In 1982 Helmuth Hardekopf Bunker GmbH (renamed BP Bunker GmbH in 1984) was founded with the responsibility of supplying fuel and lubricants to inland and coastal navigating vessels. International shipping in German seaports, on the other hand, is supplied bunker oils (heavy residual petroleum fuel oils) and lubricants by BP Marine. A supplier of aviation fuel, Air BP was by 1991 providing one-sixth of such fuel sold in Germany at both international and domestic airports.

By the end of the 1980s most of Deutsche BP’s operational business had been delegated to its subsidiaries, which act on behalf of Deutsche BP. The head office of Deutsche BP both acts as a holding company and is responsible for fixing corporate objectives and strategies and monitoring their implementation. Thus, in 1989 the trade activities of Deutsche BP became centralized under a new subsidiary, BP Handel GmbH.

Deutsche BP has been a leader in consumer services at its filling stations in Germany, which are now operated by its subsidiary BP Tankstellen GmbH. In 1959 Deutsche BP came out with SUPERMIX, the first homogeneous blend of super and regular gasoline. In 1964 Deutsche BP was the first company to introduce the coin operated gasoline pump in West Germany. In 1970 it was the first oil company whose filling stations offered self-service. In 1988 Deutsche BP filling stations were the first in Germany to accept a credit card, and by 1991 about 90% of Deutsche BP’s 1518 retail outlets accepted credit card and electronic cash payments. In 1990 Deutsche BP opened its first truck stop near Hannover, and by 1992 it had three in operation. Attention continues to be devoted to improving customer services with multi-product dispensing pumps (choice of grades from a single pump), more service stations open around the clock, and over 100 mini supermarkets.

At the same time, Deutsche BP, in its capacity as a holding company, decided to cut back in other investment activities, such as real estate, in order to concentrate on its core business of petroleum. In December 1990 Deutsche BP sold off its parking garage business. It completely turned over 27 parking garages to an English-Belgian consortium. According to the Süddeutsche Zeitung the proceeds of the garage sales were primarily used for the buildup of Deutsche BP’s petroleum activities in the new states of eastern Germany.

Deutsche BP has endeavored to stay at the forefront of modern technology, especially in the 1980s in the area of environmental protection. In 1981 the company earned an energy research award for its project “Fuel from Sludge.” The German Federal Environmental Office and Deutsche BP in 1985 put forth a prototype of a quiet tanker, “Fliistertanker”. Also in that year Deutsche BP organized its conference “Environment ‘85” in Bonn. In 1987 Deutsche BP introduced the product “Rigidoil” for the removal of oil pollutants from inland waters, installed a dust removing facility for the catalytic cracker at the refinery in Bavaria, and also introduced a gas recovery system to reduce the hydrocarbon emissions during the transfer of oil products within refineries and oil depots. A vapor recovery system for gasoline dispensing was installed at filling stations in 1991.

In the summer of that year Deutsche BP founded the Technology Center Hamburg (TCH) on the site of the BP Oiltech GmbH in Hamburg/Neuhof. The center combines the research and development sectors together with the applied technology facilities. The TCH is primarily engaged in the further development of petroleum products and related technical services, such as quality assurance, technical advisory services, and environmental protection analysis. The TCH also conducts development projects in the fuels and lubricants sector for BP Oil Europe toward the improvement of motor oils and the expansion of environmentally friendly biolubricants.

Deutsche BP was quick to take advantage of the changes in the East. In 1990 Deutsche BP opened its first filling station in the former German Democratic Republic in Dresden, which within a year after reunification had become one the company’s highest through-put stations. In December of 1990 a cooperation agreement was signed with two companies of former East Germany, Leuna-Werke AG of Leuna and Intrac Handelsgesellschaft mbH of Berlin, for the marketing of Leuna’s petroleum products. Under this agreement three joint-venture companies were established, of which each partner owns a third: a wholesale company to sell finished petroleum products according to BP specifications; an operating company in which Deutsche BP has invested DM 60 ($40) million to build a road tanker loading facility with an annual capacity of 3 million tons; and a marketing company to distribute the products from Leuna under the BP name to intermediate dealers and customers. The 5 million ton annual output of the Leuna refinery will also supply Deutsche BP’s own filling stations in the eastern states.

Deutsche BP’s objective is to achieve by the mid-1990s the same market share in the East, 10%, as it has in western Germany. To do so, it began establishing extremely modern, high-volume retail outlets at prime locations within the urban centers of the states of Thuringia, Saxony, Saxony-Anhalt, and East Berlin. During the year 1991 Deutsche BP put 16 high-volume retail outlets into operation in eastern Germany and planned to build another 25 in 1992. In 1991 Deutsche BP invested more than half of the DM 175 ($116) million it had allocated to the retail oil sector toward developing its retail network in the eastern states; this move began to pay off immediately with a greater increase in gasoline sales in the East than in the West for that year. By 1995 BP hopes to undertake the construction of more than 100 stations in the eastern states with a further DM 500 ($330) million investment planned. Sixty-five percent of the orders to erect the filling stations will be allocated to local enterprises. Looking for additional means of supply, in April 1991 Deutsche BP became part of a consortium of Hamburg-based oil companies constructing a 450-kilometer product pipeline from Hamburg to the Saxony regions and Dresden, which was expected to become operational in 1994-95.

In 1991 sales in virtually all of its petroleum products increased overall by 7% in volume over the previous year. While gasoline sales stagnated in western Germany, largely due to an increase in the Mineral Oil Tax that became effective July 1, increased motorization in the East led to an increase there. The subsidiaries belonging to the group’s chemicals sector contributed less towards earnings, reflecting the weaker trend in chemicals and depressed prices. However, this decline was more than compensated for by the favorable earnings in the oil business.

Deutsche BP saw increasing sales from a low in 1988 through 1991, but in the early 1990s, profits were checked by new taxes and investment expenditures, and prospects for the near future did not look very good. The world oil supply, despite the Gulf War and the collapse of the Soviet Union, remained abundant and prices relatively low, meaning competition would remain keen. Furthermore, the continued economic recession meant that the oil industry would not see an expansion in the near future. Deutsche BP nevertheless was expected to maintain its present market share.

Principal Subsidiaries

BP Oiltech GmbH; BP Handel GmbH; BP Tankstellen GmbH; BP Bunker GmbH; BP Flüssiggas GmbH; BP Transport und Logistik GmbH; Raffineriegesellschaft Vohburg/Ingolstadt mbH (62.5%); BP Chemicals GmbH; Carborundum Deutschland GmbH; Gelsenberg AG; Globol GmbH (75%); EC Erdólchemie GmbH (50%).