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Fri 26 Feb 2010 12:02 PM

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Dubai's ENOC to hold back on 2010 acquisitions

State-owned refinery firm has assets of about $6.5bn - Chief Financial Officer.

Dubai's ENOC to hold back on 2010 acquisitions
(Getty Images)

Dubai state-owned refiner Emirates National Oil Co (ENOC) will hold back on acquisitions this year as it focuses on existing operations, a senior executive said on Thursday.

ENOC, a downstream-focused firm owned by the emirate's sovereign wealth fund Investment Corporation Dubai, operates service stations, fuel terminals and oil tankers in the Gulf.

"It's too early in the year to say if there will be no acquisitions at all, but I think for the time being the focus is our current refineries," chief financial officer Petri Pentti told Reuters by telephone.

He added at the end of 2009 the company held assets worth $6.5 billion.

ENOC tried late last year to gain control over Dragon Oil, which operates mainly in Turkmenistan, in a move to boost assets to meet increasing domestic energy demands.

Shareholders in the firm in December rejected ENOC's $1.9 billion acquisition bid for 48.5 percent of the Dragon stock it did not already own.

ENOC's attempted investment in Dragon would have been the first acquisition by a Dubai government entity in more than two years as it grapples with the $22 billion debt restructuring at conglomerate Dubai World.

The vote was also a setback for refiner's plan to become an integrated upstream and downstream oil company and meant it would not be able to gain access to Dragon's $1 billion cash pile and strong cashflows.

"This year the focus will be on the vertical integration of the business and upgrading our refineries and so far there are no plans for any investments," Pentti said.

ENOC, which began commissioning new units at its Jebel Ali refinery in December after completing a $850 million overhaul, is raising capacity to about 120,000 barrels a day (bpd) from 70,000 at present, Pentti said.

"The new units will start around May," he said.

The project's initial budget was around $500 million, but Jebel Ali, like many other energy projects worldwide, suffered cost inflation as oil ran up to a record high near $150 a barrel in 2008.

Jebel Ali is the smallest of four refineries in the UAE. The largest is the Ruwais plant run by the refining unit of the Abu Dhabi National Oil Co (ADNOC) and has capacity of 415,000 bpd. (Reuters)

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