Last Wednesday, Shell Hungary Zrt announced that its network of filling stations in Hungary will be further extended with the addition of up to 10 new units. Explaining the decision, CEO István Varga stated at a press conference in Budapest that there are still some stretches of motorway in Hungary where petrol stations are 90 kilometers apart, thus allowing scope for further growth. Rob Routs, downstream executive director at Royal Dutch/Shell Group, added that Hungary is a secure and sound market for Shell products. In stark contrast to its further development in Hungary, Shell has been busy divesting itself of its filling stations in Romania. In November 2004, the Shell Group reached an agreement with Hungary’s Mol Rt to sell the latter its shares in Shell Romania SRL, excluding Shell Gas Romania SA. The divestment included a network of 59 retail service stations geographically spread across Romania, as well as the aviation, lubricants, commercial and marine businesses. Regulators approved the sale in April 2005. Of the deal and the reasoning behind it, Routs explained that the agreement with Mol was the result of intensive work carried out over preceding months. “The transaction is consistent with Shell’s strategy of ‘more upstream, profitable downstream’,” he said. “One way of increasing the profitability of our downstream assets is through greater focus on those markets in which we are best positioned to operate successfully.” For its part, with this and further acquisitions, Mol now operates 130 stations in Romania, increasing its estimated retail market share there to 10%. Predominantly involved in the retail of fuel and oil derivatives, chemicals and LPG (liquid propane gas), Shell Hungary recorded revenues of Ft 171 billion (€650 million) in 2004, 25% up on the previous year. Profits in 2004, however, rose only a slight 3% to Ft 3.4 billion, affected by the cost of integrating filling stations purchased from the TotalFinaElf Group into its Hungarian sales network, Varga noted. Shell’s network in Hungary was boosted dramatically in April 2003, when it announced the acquisition of a total of 70 sites in Hungary, 33 sites in the Czech Republic, and seven motorway sites in France from TotalFinaElf. In exchange, the latter purchased 133 Shell retail sites in Germany. At the time, Shell Europe Oil Products President Adrian Loader said the deal with TotalFinaElf fit well with Shell’s strategy of enhancing its portfolio in high-growth markets such as Hungary and the Czech Republic. “The essential factor in these markets is achieving sufficient scale to further improve service to our growing customer base, and to ensure an effective distribution and logistics operation,” said Loader. “This acquisition will also allow us to make our very successful performance fuels and other offers more widely available.” In its retail business, Shell Hungary sold 21.6% more vehicle fuel in 2004 than in 2003. The company was the second biggest fuel retailer in Hungary after Mol, which is the clear market leader with 358 filling stations. Shell operates a total of 184 filling stations in Hungary, giving it a 22% share of the market, compared to Italy’s Agip SpA with 121, and Austria’s OMV AG with 168. Varga noted that “petrol tourism” accounts for some 5%–10% of Shell’s sales in Hungary, mostly at its stations in the eastern part of the country. Return on average capital employed (ROACE) at Shell Hungary, which indicates the efficiency and profitability of capital investments, was 24% in 2004. After-tax profits were placed into a dividend fund. In 1907, the Royal Dutch Petroleum Company and the U.K.’s Shell Transport and Trading Company merged their activities into one global company, Shell Group Plc. One hundred years later, the group is one of the leading fuel and chemicals groups in the world, with wide-ranging activities in chemicals and fuel trade, refining, transport, exploration and retail in 140 countries. Here in Hungary, Shell has been present since the formation of Shell Crude Oil Rt in 1926. Having undergone various name changes, ownership structures and a prolonged period of absence following World War II, only returning in the 1960s, the company was formally amalgamated as a 100% Shell-owned company on Jan. 1, 1994. By the end of that year, Shell operated 15% of all filling stations in Hungary and commanded a 20% share of product sales.