* Shell's Italian petrol pumps to be rebranded Q8 this year
* Shell network comprises more than 830 pump stations
* Deal could be worth up to 500 mln euros - report
By Stephen Jewkes
MILAN, Feb 20 (Reuters) - Royal Dutch Shell hasagreed to sell its Italian retail business to Kuwait PetroleumInternational (KPI) in a move that could shake up Italy'sinefficient petrol distribution network.
Italy has about 24,000 petrol stations dotted across thecountry, twice the number that are in France and almost threetimes that are in Britain.
Successive Italian governments have called for a reductionin the number of petrol stations and the introduction of moreself-service pumps to make the sector more competitive but havemet with stiff resistance from operators.
In a joint statement on Thursday, Shell said that the Q8brand of KPI would replace that of Shell on the Italian networkonce the deal gained clearance from the competition watchdogsome time this year.
Shell last year said that it intended to sell some of itsItalian downstream assets, including its retail, aviation andsupply and distribution businesses.
No price indication was given for the deal with Kuwait, buta report in Italian daily MF on Thursday said the network couldbe worth up to 500 million euros ($687.67 million).
A statement from law firm Clifford Chance, which advisedShell in the deal, said Shell's retail network comprised morethan 830 service stations.
"The Shell network was more focused in the rich north andnorth-east of the country and this deal gives Q8 a bettergeographical reach," a source close to the deal said.
Kuwait Petroleum has about 2,700 petrol pump stations inItaly with a market share of around 11 percent.
Italy's top petrol retailer is oil and gas major Eni, which has 4,698 sales points, according to data fromItalian petrol association Unione Petrolifera.
"This deal is an important step forward for Q8 instrengthening its competitive position on the Italian market,"said Alessandro Gilotti, CEO of Kuwait Petroleum Italia.
Falling demand because of continuing economic weakness has led many car-mad Italians to leave their vehicles at home,squeezing margins for many petrol retailers and prompting callsfor consolidation.
Shell, which in 2012 withdrew from a project to build aliquefied natural gas (LNG) plant in Sicily, said that Italyremained an important country for its oil and gas explorationactivity.
"The sale is consistent with Shell's strategy to concentrateShell's downstream footprint on a smaller number of assets andmarkets where we can be most competitive," the company said.
