Topaz achieved instant scale when it entered the sector less than two years ago. It expects to be around for a while, writes Arthur Beesley, Senior Business Correspondent

Rare is the businessman who won't buy from one of his own franchises, but Topaz chief Danny Murray is one of them. So there's no point complaining to him that the Statoil filling station at Usher's Quay, Dublin, has been charging almost €1.36 for a litre of petrol when others charge less than €1. He'll agree with you.

Topaz took command of Statoil's distribution business two months ago in a multimillion-euro deal that followed its acquisition in 2005 of the Shell network.

Murray readily agrees that the Usher's Quay price, highlighted in media reports last week, is at the steep end of the scale. Yet he claims to be powerless to determine prices at his dealerships.

"We think it's too high. I wouldn't buy petrol there. We don't own that station. It's one of the dealers, so it's an independent guy. To be fair to him, he's allowed to sell at whatever price he wants to sell. We cannot tell him what price to sell at. We don't agree with somebody charging that price. It's too much."

Such pricing looks all the worse for Topaz because the group has been at pains to position itself as an Irish-owned rival to multinational titans such as Texaco, Esso, ConocoPhillips and Tesco. It looks bad.

"We contract with people for certain amounts of time," says Murray of the group's relations with its dealers. "When those contracts are up, the dealer has a right to walk away and we have a right to walk away. So that's something we can consider in the future."

A former chief of DCC's fuel arm Emo, Murray insists that Topaz and the fuel market generally are competitive and responsive to the recent downward trend in global oil prices.

He cites Automobile Association figures which show that an industry average price of €1.22 per litre last August, up from €1.05 in January, fell again to €1.04 in December.

"I defy you or any other journalist in Ireland to find an industry that would move the price from where we moved it to and then would move it back down again. Other industries would get to €1.22 and stop."

Topaz achieved instant scale when it burst onto the fuel sector less than two years ago. With some of Ireland's richest and most driven corporate chieftains on the share register, the group enjoyed heavyweight support from the off and a rather large credit line from Anglo Irish Bank.

Neil O'Leary's private equity vehicle Ion Equity is a prime backer, with telecoms magnate Denis O'Brien and Galway property investor Gerry Barrett also in the mix. The breakdown of individual interests has never been made public, although Murray, other Topaz managers and Anglo are also known to have stakes in the business.

As it stands, Topaz has already made a sterling return on its €160 million outlay on the Shell business by aggressively seizing opportunities in the go-go property market of south Dublin.

The disposal of "eight or nine" properties from the company-owned portfolio of 45 sites has provided massive spin-off gains for the group, even if motorists despair at the closure of local stations.

"We've generated about €70-€80 million from those sales. That was a big percentage of what we paid," Murray says with a smile. He is not inclined to gloat, but the "big percentage" in question is 50 per cent.

A couple of other Shell sites are to be sold and others in the Statoil portfolio of more than 30 company-owned sites are also likely to go that way.

"We will sell a station if it's worth considerably more than we can make at it going forward, and we will use the money to invest in places where we can make money. Topaz is always going to be a serious player in this market going forward."

Murray denies that motorists are starved of fuel as a result of the sell-offs. "There are lots of stations around south Co Dublin. You have to get out there and turn off the road a little and you'll find them."

He also insists that Topaz ploughed much of the Shell money back into the business to fund the Statoil deal. In addition, some of the proceeds of land sales will be used for a new filling station on the city side of the Dublin Port Tunnel and others at Tyrellstown, Carlow, and on the M1 motorway. The group will also bid for some of 12 National Roads Authority public-private-partnership sites on the national motorway network.

As for corporate activity, Murray says Topaz has the potential to refuel the tank for more acquisitions. Further deals in Ireland would not be allowed for competition reasons, but Topaz will examine fuel assets if they come on the market in Britain or further afield in Europe.

"If we came up with the right opportunity, we could find the money. It's an option for us if the right set of assets became available. We'd be looking at the big multinationals and where they want to exit a country, like Shell and Statoil did here in Ireland, maybe that's something that would be of interest to us."

For all of that, Murray acknowledges that investors in a group with a private-equity ownership structure are likely to seek an end return on their interest within three or five years.

"On the scale that you've given me of more likely or less likely, I'd have to say that that was more likely. We haven't sat down and talked about it."

Exit avenues include straightforward sale or flotation, but Murray says he'd like "a few more options" to consider. Whatever happens, the owners will make an assessment of the business at an appropriate moment.

"I've no doubt in my mind that this business will be here in 30 years, in 100 years. I think that the ownership can and does change in business."

For the moment, and for some time to come, Murray's concentration is on running the business. After the completion of the Shell deal in late 2005, he faced into 2006 with charge of a €1.5 billion business, including considerable taxes. Post-Statoil, he expects a turnover of €3 billion this year.

He says business was profitable on the bottom line last year and will be again in 2007, but won't specify the profit margin, stating only that it is "a very small percentage".

With a projected throughput of 3.5 - 4 billion litres of fuel, the group expects to supply almost 40 per cent of all oil that comes into the economy. To bring the group to this position, Murray spent more than two years in a frantic round of deal-making.

Topaz didn't expect Statoil to come to market last year within three months of the Shell deal closing. Nevertheless, the group won out in the final round of a bidding war with Canadian group Irving and Galway-based Sweeney Oil.

The Competition Authority inadvertently cleared the Statoil deal due to a simple timing error, leading to some criticism of the transaction. However, Murray says Topaz is fulfilling all its obligations under a voluntary agreement with the authority that included each of the issues that the regulator wanted to address.

Now the moment has come to bring Shell and Statoil together and run them under one roof. About 40 per cent of the combined turnover comes from filling stations while the remainder comes from commercial, home-heating, aviation and lubricant activities. It's a big task.

"Only in the last couple of months since the Statoil business was taken over have we started really on the integration of the two businesses."

Near the top of the current to-do list is the selection of a brand name for the business and creation of a brand identity. "We'll probably be rebranding. We are looking at it at the moment."

Retaining the Topaz name is a possibility, but Murray says he will be examining other options too. He is looking for a "short word, rather snappy". Given the rapid pace of progress at Topaz, expect a decision soon.