OSLO - Norway's Statoil plans to spin off and float its international chain of gas stations in the latest move by a major western oil company to reduce its exposure to low-margin fuel retailing.

Several big oil firms have in recent years sold off big chunks of their retail operations to focus investments in the more lucrative sectors of finding and producing oil and gas.

Analysts welcomed Wednesday's announcement, which paves the way for Statoil to gradually scale back ownership of its least profitable operations while maintaining a supply chain based mainly on two refineries in Scandinavia.

Statoil said the to-be-floated Energy and Retail (E&R) division services more than 1 million private customers per day and runs 2,300 fuel filling stations in eight countries, as well as units that supply lubricants, aviation and marine fuels.

It would most likely be listed on the stock exchange, at the earliest in the fourth quarter of this year, Statoil said, adding that a final decision on the spin-off was due in March.

In the future, we believe that this unit's growth and further development will be best achieved as an independent company with direct access to the capital markets, Chief Executive Helge Lund said in a statement.

If it proceeds with the initial public offering, Statoil said it would be a significant owner at the introduction and over time its ownership would be tailored to the new company's development needs.

Norway's biggest company, worth $75 billion, declined to comment further on or give a valuation for the planned IPO.

PUMPING PROFITS

Over the first nine months of 2009, some 3 percent of Statoil's 96.4 billion crown ($16.4 billion) pretax adjusted earnings came from its manufacturing and marketing segment, which includes E&R and other divisions.

The division needs more money, analyst John Olaisen at Carnegie said. It is difficult (for Statoil) to allocate money to a unit with low returns on invested capital. To grow it's smart for them to be independent.

BP (BP.L) sold its U.S. retail network in 2007, and in 2008 Exxon Mobil (XOM.N) did likewise. Royal Dutch Shell (RDSa.L) has agreed to sell retail networks in Greece, Ireland, Kenya and the Caribbean in recent years.

However, they all retain retail operations in some countries where they believe they have a competitive advantage. Statoil's aims to make a complete break from the business, even in its home Scandinavian markets.

Statoil says it holds a leading 23 percent market share in the Scandinavian service station sector and also has retail outlets in Poland, Russia and the Baltic states.

The E&R division also operates 15 oil terminals, 500 road tankers and 140 tank depots in Europe, including 50 located at Scandinavian airports and others across northern Europe.

Statoil said the spun-off business would retain its droplet logo and service station design, which represented a large part of E&R's brand value.

It would also be natural to maintain existing market-based supply agreements, Statoil said. The Mongstad refinery in Norway and Kalundborg in Denmark supply fuels to the division and will not be affected by the new ownership structure, Statoil added.

Fewer than 10 percent of E&R's roughly 12,000 employees work in Norway and some 80 percent are employed at service stations.

This development is positive, said analyst Trond Omdal at Arctic Securities. But it has very limited strategic value. All value creation occurs in the upstream divisions.

Statoil shares were up 0.2 percent at 137.4 crowns at 1254 GMT, slightly lagging the DJ Stoxx Oil and Gas Index .SXEP. (Additional reporting by Tom Bergin in London; editing by John Stonestreet)

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