RIYADH, 18 November 2007 — The Dabbagh Group of Saudi Arabia, in partnership with Hinduja, a major Indian conglomerate, bought Petromin — a joint venture between Saudi Aramco and Mobil Investments — for $200 million (SR750 million), a senior official of Petromin told Arab News on Friday.
The Petromin takeover by Dabbagh Group and Gulf Oil International, a subsidiary of Hinduja, represents a significant trend in the oil sector that not only underlines growing investment in the Saudi downstream oil industry but also inflow of capital from India into the Kingdom’s energy sector.
Petromin, the largest manufacturer of lubricants in the Kingdom, exports to over 20 countries. Prior to the takeover, it was a joint venture between Saudi Aramco (71 percent) and Mobil Investments (29 percent), an affiliate of Exxon Mobil, with an annual sale of 80,000 metric tons and an annual turnover of over $ 200 million.
Sanjay Hinduja, chairman, Gulf Oil International, said in an announcement after the takeover: “This acquisition will help Gulf Oil consolidate its presence in the growing Middle East market and will also build the platform for growth for our business in the Middle East and Africa.” Gulf Oil International, which is spearheading an expansion drive, recently acquired a lubricant plant in Jebel Ali and is also constructing a new 50,000 ton lubricant plant in Yantai, Shandong province, China.
Saudi investors will also be offered another avenue into Saudi Aramco’s refining business soon. January will see Saudi Aramco and Japan’s Sumitomo Chemical list a 25 percent stake in their $9.8 billion joint refining and petrochemical venture PetroRabigh.
The sale, once underway, will represent the first initial public offering to involve the state-owned company. Other investment opportunities involving Saudi Aramco, which plans to raise its oil production from the current 10.8 million barrels per day (bpd) to 12.5 million bpd by 2009, include plans to sell stakes in joint ventures for two new 400,000 bpd oil export refineries. The first will be a full-conversion refinery in the industrial city of Yanbu on the Red Sea coast; the second will be a heavy crude refinery in Jubail on the Kingdom’s Gulf coast. Both facilities are scheduled to begin operations in 2011. The two refinery deals, valued at $6 billion each, are part of Saudi Arabia’s goal to become an increasingly important supplier of gasoline and heating fuel to international markets.
The Kingdom is the largest oil exporter in the OPEC group with estimated reserves of 264 billion barrels. As oil prices continue to surge, so do government oil revenues. Oil, gas and refining were estimated to be worth 59.4 percent of Saudi Arabia’s GDP in 2005. The latest move by Saudi Aramco comes on the heels of previous initiatives that saw Riyadh-based Jadwa Investment agree to purchase ExxonMobil’s share in the Saudi Aramco Lubricating Oil Refining Company (Luberef) early this month. In February this year, Saudi Arabian Lubricating Oil Company (Petrolube) and Bharat Petroleum Corporation Limited (BPCL), the second largest petroleum company in India, signed a blending and marketing agreement of Petromin oil products in India.
These moves in the oil sector point toward a significant trend which shows that ExxonMobil, a major US oil conglomerate, is divesting itself of its shares either to Saudi or Indian companies.
In a related development, Advance Petroleum Services Ltd. (APSL), part of Dabbagh Group’s Energy portfolio, said it had acquired 100 percent of the shares in Petrolube from Saudi Ara and Mobil Investments S.A., an affiliate of ExxonMobil.
