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Arval seeks reconciliation as BP lays cards on the table

Date: 02 September 2008

BP recently announced it would stop accepting Arval fuel cards at 300 petrol stations, but is the whiff of compromise now in the air? Paul Barker investigates

BP's statement didn't sound like one from a firm in negotiations: "From 31 October 2008, Arval cards will no longer be accepted at BP operated sites," said a company spokesman.

"The decision to end the relationship between BP Oil UK Limited and Arval after a long partnership was a particularly difficult one, but necessary in the current business environment."

Yet Arval believes the marriage isn't necessarily over.

"There is still an ongoing dialogue, and a further meeting is scheduled for shortly," Arval marketing boss Chris Davies told BusinessCar. "This is the normal period of contract negotiation. We have it every few years."

But surely the UK's biggest fuel firm coming out and making a public statement isn't the normal sequence of events halfway through a negotiation?

"We were slightly surprised, yes," Davies admitted, "but if BP wants to do that then it's up to them. It's different to what has happened previously, but in terms of negotiations, they are ongoing."

A new meeting date is still to be confirmed, with insiders saying only it will happen "in the next few weeks". But with just weeks until BP's deadline, UK fleets holding a total of 1.3m Arval Allstar cards will be in limbo, waiting to see if they have to inform drivers that BP stations are now off limits.

"As it's the summer holidays, getting people together can be difficult," said Arval's Davies. "We're looking to get a conclusion to negotiations as quickly as possible."

BP, however, is less positive about a reconciliation.

"There's a meeting but BP's plans are already in place," said the spokesman.

The spat, over the fees attached to using Arval cards, involves a quarter of the UK's 1200 BP-branded sites. While 900 are independently run but buy BP fuel, the 300 owned and operated by BP will stop taking Arval Allstar cards at the end of October.

Arval is talking to the 900 independent sites and Davies described conversations as "very positive".

So if Arval loses BP rights, how will that affect the business?

"Arval's biggest selling point is universal acceptance, and anything that eats into that, and BP is the strongest brand. well I'd have thought that would be quite a blow to them," said Steve Clarke, boss of fuel card broker The Fuelcard People. "BP is the market leader and Shell and the others tend to follow." (See 'Fuel firms say...' below.)

Arval's Davies said the firm is in the "normal period of negotiations with other companies, and from our perspective we've picked up nothing to say this is anything other than normal".

Meanwhile, BP claims it is already sending out point-of-sale material to its filling stations to advertise the fact it won't be accepting Allstar cards.

"We're making an effort to make customers aware," said a BP spokesman.

Arval, though, is hoping negotiations will be successful and isn't notifying customers there could be a change. "If customers are asking questions we will respond to them, but we don't normally comment to customers while negotiations are going on," said Davies.

But the firm, predictably, denies it would constitute a problem if the worst did happen.

"It's only 300 stations out of the 9500 we're accepted at," said Davies. "But our expectation is that we'll get to a satisfactory position for ourselves, BP and our customers