SHELL is at an advanced stage of negotiation with US oil giant Chevron to purchase its 450-strong UK network of Gulf filling stations. If successful, the deal will see more than 50% of the UK filling station network concentrated in the hands of the big three - Shell, BP and Esso - prompting renewed concern about the threat to competition in the petrol retailing market.

Both parties confirmed they were engaged in talks and - subject to internal board approval and regulatory approval - hoped to complete the deal by the end of the year. Managing director of Shell UK Downstream Colin Harvey said: 'The Gulf retail network has many premium sites and these can complement our strong existing network and significantly grow our market share. A Gulf spokeswoman said its parent company had received a number of bids, but the board favoured the Shell offer and was now involved in sale negotiations.

It is not clear whether Shell will also take over Gulf's Network fuel card at this stage. If its bid is successful, it is unlikely Shell will retain all 450 Gulf sites, but the acquisition could still increase its current network of 1,700 in the UK by up to 20%.PHH divisional manager, fuels Keith Greenhead said the merger signalled further contraction of the UK's fuel retailing network and threatened to push prices higher.