Thursday, 5 September 2013

ADNOC Buys Out Emarat Network - Finally

(Photo credit: SimonQ錫濛譙)
So it seems that the northern emirates' green gas stations are finally to go blue - ADNOC has announced it has signed an agreement to acquire Emarat's 75 service stations and its Sharjah distribution terminal. The service stations will 'gradually' be rebranded, according to Gulf News today.

This agreement is presumably different in some way to the memorandum of understanding the two signed in May of last year. That was reported at the time to relate to "74 of Emarat's 100 stations in the northern emirates".

I posted about it at the time and thought no more of it, but sure enough there appears to have been a year-long process turning an MoU into an actual deal. Which is not the niftiest piece of M&A work I've seen, I must say. One does wonder what the stumbling blocks were to cause such a hiatus between intent and action.

Just as a reminder, the story's all about the cost of subsidising petrol, because Dubai doesn't have a refinery, its petrol distribution companies have to buy at market rates and then meet a Federally mandated subsidised price point, which loses them significant amounts of money. So both ENOC/EPPCO and Emarat wanted out of the Northern Emirates pronto. Emarat may have negotiated the transition more elegantly. The end result was that most amusing of situations, a petrol shortage in an oil-producing country.

Try as I might, I can't find the story on Gulf News' website. It's not in business, not in oil and gas and doesn't come up in a search of the site. And yet it's front page business in the print edition. I wonder why?

The whole shebang won't really change much for drivers in the north, particularly in Sharjah where queues at the ADNOC stations can get really quite long. The red EPPCO stations have been partly or totally dismantled or just stand idle, as do the light green ENOC ones - unloved, rubbish-strewn and dusty they stand, useless pieces of seemingly unwanted real estate...
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