Pennzoil agreement could bring Shell into Israeli market

Zoko CEO : They may enter Israel under the Shell brand.

Zoko Enterprises Ltd. (TASE:ZOKO) has signed a distribution agreement to market Pennzoil products in Israel and the Palestinian Authority. The contract may indicate that Royal Dutch Shell plc (NYSE: RDS; LSE; AEX: RDSA, RDSB), which owns Pennzoil, plans to enter the Israeli market.

Until now, Shell’s policy has been to avoid the Israeli market. Zoko CEO Yossi Smira hopes that the new contract is a strategic decision by Shell, one of the world’s largest energy companies. “We’ve had some indications that they’ll consider entering Israel under the Shell brand, which means that a very large window of opportunity has opened for us, as a company with a contract with them. We hope that this contract will result in new collaborative ventures,” he said.

In 1996, Zoko, controlled by Sir Bernard Shreier, signed a contract with Pennzoil-Quaker State Company to market the company’s oils and oil additives in Israel. Shell’s acquisition of Pennzoil in 2002 put the contract into doubt, because Zoko and Shell were in dispute and sued each other.

The parties have now decided to open a new page in their relationship, agreed to withdraw their lawsuits against each other, cancel the previous contract and replace it with a new distribution agreement signed directly between Shell and Zoko.

Under the agreement, Shell will make a one-time NIS 4 million payment to Zoko. Smira said, “This payment was made because of the disagreements created by the termination of the previous agreement.”

Published by Globes [online], Israel business news - - on October 9, 2006

© Copyright of Globes Publisher Itonut (1983) Ltd. 2006

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