UAE's ADNOC supplying fuel to Emarat - sources

  • Share via facebook
  • Tweet this
  • Bookmark and Share

United Arab Emirates fuel retailer Emarat is in the process of transferring 74 of its pump stations in the northern emirates to Abu Dhabi National Oil Company (ADNOC) in a move to save Emarat millions of dollars a year, three industry sources said.

"ADNOC has been supplying the fuel for these stations," a source at Emarat said, adding that the day-to-day management of the stations was still being handled by Emarat.

"The stations are still under our umbrella, the staff is under Emarat contracts. But I think within a couple of months it will be fully taken over by ADNOC," he said.

UAE federal fuel retailer Emarat and ADNOC signed a memorandum of understanding last May for Emarat pump stations in the poorer emirates of Sharjah, Umm Al Quwain, Fujairah and Ras Al Khaimah to be taken over by ADNOC.

A second source familiar with the matter said there was no financial transaction involved, as it was simply federal assets being handed over to ADNOC.

He said the handover was almost complete, saving Emarat around AED80m (US$22m) each month by slashing the volume of fuel it sells for much less than it buys it for.

Heavy fuel subsidies are a widespread social benefit across Gulf Arab countries, but leave those fuel retailers who are not linked to large oil producers like ADNOC taking billion dollar losses selling gasoline at well below their acquisition cost.

A UAE plan to phase out the generous subsidies in the OPEC member have quietly been shelved after widespread social unrest across the Arab world, which has so far spared the UAE.

Dubai government-owned Emirates National Oil Company (ENOC), Emirates Petroleum Products Company (EPPCO) and Emarat have been hit hardest as cash-strapped Dubai government has not compensated the companies for years.

ADNOC's profitable upstream activities easily cancel out any losses at its fuel pumps, analysts say. ADNOC distribution was not available for comment.

The combined losses of the four UAE state-owned retailers were estimated to reach to AED12bn (US$3.27bn) last year from AED8.5bn (US$2.31bn) in 2011.

Standard grade gasoline in the UAE is sold at AED1.72 (47 US cents) per liter, less than half of the global average price of US$1.21 a liter, according to World Bank data.

Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

Posted by: Hisham

There's been some fuss about lowering gas prices in the UAE a few months back. The last message was that there was a settlement to lower prices by 30% to stimulate the economy and improve competitive position against neighbouring countries. And the past few months: nothing! Not in the papers nor at the pump. Anyone know anything about that?

Enter the words above: Enter the numbers you hear:

All comments are subject to approval before appearing

Further reading

Features & Analysis
Petroleum producers shift attention from Middle East: Kemp

Petroleum producers shift attention from Middle East: Kemp

Following four decades of war, sanctions, nationalisation and...

Back in business

Back in business

Iran’s tankers are back on the oceans as sanctions on the Islamic...

A new future for Saudi Arabia?

A new future for Saudi Arabia?

The vast Wadd Al Shimal phosphate mine in the north of Saudi...

Most Discussed
  • 22
    World's most pierced man refused entry to the UAE

    Its quite hypocritical & childish that most people use their children as excuses to persecute their views unto others. Were all of you as innocent when... more

    Wednesday, 20 August 2014 9:03 AM - Calvin Pinto
  • 13
    Baby NOT on board?

    I am sure the Writer of this article as well as some of the guys who commented would have been the best behaved kids in their times; never ran around... more

    Wednesday, 20 August 2014 4:44 PM - Wildwine
  • 5
    CEO of Just Falafel to step down

    Every word mentioned above by Omar is 100% true. I have been closely watching and analyzing JF and I am wondering at their strategy, speed of growth and... more

    Wednesday, 20 August 2014 8:24 PM - Ivar