Caltex Australia (Caltex), which is 50 per cent-owned by Chevron Corp, has entered into an agreement to acquire 302 Mobil service station sites in Australia at a cost of $300 million including estimates for inventories and other settlement costs.

''The acquisition is a good strategic fit for Caltex. It will enable Caltex to grow its business consistent with its long term strategy of being a marketing-led business," Caltex managing director and CEO Des King said yesterday.

"Today, Caltex is primarily a wholesaler of fuel but a relatively small player in the retail fuel market when compared with Coles Express, Woolworths and BP. This acquisition will allow us to better compete in the retail fuel market with these major players."

The Australian Competition and Consumer Commission said it would scrutinise the deal as Coles and Woolworths dominate the retail petrol market and taking out a major player would leave the three remaining companies with greater capacity to influence prices.

The deal could be blocked if the deal lessens competition in the fuel market, said Small Business Minister Craig Emerson.

"If it's anti-competitive then, of course, we would be very unhappy and I think the ACCC in those circumstances would give it the thumbs down,'' Dr Emerson told ABC Television.

Competition is what drove petrol prices down and lack of competition was what allowed petrol prices to go up, he said.

"Let's get it objectively assessed ... and then make a decision,' he said.

"Caltex will take on more than 1,700 employees. We regard employees as a key asset," King said adding that Caltex's long term commitment to a strong balance sheet will enable the acquisition to be funded from internal sources.

However, industry groups raised concerns that the sale would result in less competition because Caltex, which is Australia's largest oil refiner, and its joint venture partner, Woolworths, already had a dominant position in the retail market.

Industry sources expressed surprise at the sale price and said Mobil had been asking about $1 billion for the sites last year.

The deal will boost Caltex's retail market share to 22 per cent from 16 per cent, on a par with Woolworths' 22 per cent, and Coles' 22 per cent.

In April last week Caltex had indicated that it would target oil refineries for acquisition, which might be put on block as a result of change in strategies by oil majors due to the current economic meltdown. (See: Caltex Australia plans to buy more oil refineries).

In a statement, ExxonMobil said the gas station sale doesn't include any other part of its Australian operations, called Mobil Oil Australia.

''Mobil will continue to compete in the supply, terminaling, wholesale marketing of fuels products in Australia, as well as with lubricants, petroleum specialties, refining and chemicals business,'' the statement said.

Caltex reported A$97 million operating profit for the first quarter, an 11 per cent upsurge, compared to the previous year mainly on account of increased diesel and jet fuel sales, although petrol sales were lower.

Last year, Caltex reported a 58 per cent fall in operating profit and a 95 per cent fall in statutory profit after being hit by a sharp fall in the value of the Australian dollar.