Fuel refiner and retailer Caltex has confirmed it has made an offer to buy supermarket giant Woolworths' service station business.
Caltex, which is currently the exclusive supplier of petrol and diesel to Woolworths, says the deal is conditional and confidential and the existing fuel alliance will continue.
The sale process is ongoing, with any transaction remaining uncertain and expected to take time to complete, a statement from the company said on Tuesday.
Woolworths is yet to comment but, in September, announced it was discussing a possible sale with several interested parties.
Caltex has been trying to move its business more toward retail as its revenue is hurt by a significant decline in refiner margins and falling petrol volumes
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Its average refining margin for the six months to June 30 slipped to $US10.10 per barrel, from $US16 a barrel the same time the previous year.
In August, Caltex unveiled a 15.2 per cent drop in half-year profit to $318 million, while underlying profit, which strips out oil prices, rose one per cent to $254 million.
Woolworths, which is selling assets to shore up its struggling supermarket business, has 530 service stations that made $4.6 billion in sales in 2015/16.
It has sold its Home Timber and Hardware business to Mitre10 owner Metcash and is closing down its failed Masters big box chain.
Shares in Caltex was down $1.29, or 3.76 per cent, at $33.02 at 1350 AEDT, while Woolworths shares were up 10 cents, or 0.41 per cent, at $24.35.
