Portuguese energy company Galp and Spain’s Moeve have ended negotiations over a proposed combination of their refining and fuel retail businesses, abandoning a deal that could have created one of Europe’s largest downstream energy operators.

The companies failed to reach an agreement following months of negotiations that began with a non-binding arrangement announced on January 8, 2026. Galp confirmed on Monday that the parties had been unable to establish commercially acceptable terms for a long-term partnership.

The collapse marks a setback for efforts to consolidate the Iberian Peninsula’s downstream energy sector, where companies are seeking greater scale and investment capacity to remain competitive as demand patterns change and low-carbon fuel investments accelerate.

Under the proposed deal, Galp would have combined its Sines refinery in Portugal with Moeve’s Huelva and Algeciras refineries in Spain, creating an industrial platform with processing capacity of approximately 700,000 barrels per day.

The industrial venture, known as IndustrialCo, would have been controlled by Moeve’s shareholders, Abu Dhabi’s Mubadala Investment Company and U.S. investment firm Carlyle Group, with Galp retaining a stake exceeding 20%.

A separate retail business, RetailCo, would have brought together approximately 3,500 service stations, primarily across Spain and Portugal. The two sides had planned to share control of the business, which would have handled more than 6.5 million metric tons of annual petroleum product sales.

The proposed transaction was initially expected to reach an agreement by mid-2026. However, in July, Galp pushed the anticipated signing into the second half of the year, citing the complexity of the negotiations.

Galp Chairwoman Paula Amorim acknowledged that the proposed combination offered an opportunity to establish a major European downstream operator but said the companies had failed to reach sufficient commercial alignment.

Despite the setback, Galp maintained that consolidation remains a strategically attractive option for improving competitiveness, operational scale and investment efficiency across Europe’s downstream industry.

The company said the termination would not affect its existing operations or its ability to generate value independently from its refining and retail businesses.

Galp highlighted its extensive Portuguese service station network and ongoing energy transition investments at its Sines industrial complex, including a major green hydrogen electrolyzer project and an advanced biofuels production facility.

The company also reaffirmed its commitment to expanding its upstream portfolio, which includes oil and gas production assets in Brazil and growth opportunities elsewhere, while maintaining financial discipline and its existing capital allocation priorities.

Meanwhile, Moeve, formerly known as Cepsa, said it would continue implementing its strategy to expand low-carbon businesses independently. CEO Maarten Wetselaar indicated that the proposed combination was an opportunity to accelerate growth rather than a prerequisite for the company’s transformation.

The failed negotiations leave both companies pursuing separate strategies in a European downstream market facing pressure to improve refining competitiveness while financing investments in cleaner fuels and energy infrastructure.

freestar.config.enabled_slots.push({ placementName: “oilprice_medrec_incontent”, slotId: “oilprice_medrec_incontent” });

This post appeared first on https://oilprice.com