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Markets

Aramco to buy 40% equity stake in GO Pakistan

  • Planned acquisition is Aramco’s first entry into the Pakistani fuels retail market, Saudi Arabia's company says
Published December 12, 2023
Photo courtesy: Aramco website
Photo courtesy: Aramco website

In a landmark development, Aramco, one of the world’s leading integrated energy and chemicals companies, on Tuesday signed definitive agreements to acquire a 40% equity stake in Gas & Oil Pakistan Ltd. (“GO”), the Saudi oil giant said in a statement posted on its website.

GO, a diversified downstream fuels, lubricants and convenience stores operator, is one of the largest retail and storage companies in Pakistan. On its website, GO says it has a network of over 1,100 retail outlets in Pakistan providing petrol, diesel and lubricants.

The transaction is subject to certain customary conditions, including regulatory approvals.

The planned acquisition is Aramco’s first entry into the Pakistani fuels retail market, advancing its strategy to strengthen its downstream value chain internationally.

“This transaction would enable Aramco to secure additional outlets for its refined products and further provide new market opportunities for Valvoline-branded lubricants, following Aramco’s acquisition of the Valvoline Inc. global products business in February 2023,” it added.

Mohammed Y. Al Qahtani, Aramco Downstream President, said: “Our second planned retail acquisition this year aligns with Aramco’s downstream expansion strategy, with a clear path ahead for growing an integrated refining, marketing, lubricants, trading and chemicals portfolio worldwide. GO has a significant storage capacity, high-quality assets and growth potential, which will help launch the Aramco brand in Pakistan.”

Experts react

Economic experts hailed the development as a positive for the cash-strapped South Asian country.

“From the economic front, this is definitely a positive,” Mustafa Pasha, Chief Investment Officer at Lakson Investments, told Business Recorder.

The analyst said that Pakistan has been using debt to pay off its debt, which is unsustainable.

“The only sustainable way to reduce the debt is by increasing exports or attracting Foreign Direct Investment (FDI) from abroad,” said Pasha.

Similar sentiments were expressed by Amreen Soorani, Head of Research at JS Global.

“Transactions like these would pave way for other large companies to invest in Pakistan,” she said.

Attracting FDI inflows has been a key challenge for the country, which fetched $525 million in July-October of FY24 as against $490 million in corresponding period of last fiscal year (FY23), showing an increase of $35 million.

However, Pasha noted that the current FDI model in Pakistan needs to change.

“It needs to be less extractive,” he said.

“The announcement by Aramco can have a knock-down effect, leading to greater interest from other global players. The thing to see now is that the upcoming investment is put to productive use and used as a showcase for other investors,” added Pasha.

Comments

Comments are closed.

Ali Asghar Malik Dec 12, 2023 04:43pm
which scripts of stock market will positive impact
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Twain pen di Dec 12, 2023 06:54pm
they will leave soon after true color of Pakistan shows.
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Irfan Dec 12, 2023 08:01pm
A good news after a very long time.
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Tashfeen Qayyum Dec 12, 2023 08:29pm
They will bring readymade product, that means import into Pakistan, then they will export profit in dollars. What’s the excitement?
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Muhammad Asad Alizai Dec 12, 2023 08:49pm
Alhamdu Lillah Thanks and praises for Allah Almighty
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Muhammad Asad Alizai Dec 12, 2023 08:50pm
Alhamdu Lillah Thanks and praises for Allah Almighty
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Fatima Dec 12, 2023 10:30pm
FDI IN CONSUMER SECTOR IS NOT GOING TO GROW THE ECONOMY
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Ian Iruss Dec 12, 2023 11:01pm
@Tashfeen Qayyum , AA . You are absolutely right . Its like Nestle pumping water out of our depleted soil selling it at exorbitant prices & then sending profits overseas .
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cool Dec 13, 2023 08:34am
“Our second planned retail acquisition this year aligns with Aramco’s downstream expansion strategy, with a clear path ahead for growing an integrated refining, marketing, lubricants, trading and chemicals portfolio worldwide At least people should bother to read this. Pakistan a lot of furnace oil which better should be refined instead of exporting it on loss and importing petrol and diesel at high prices. China is reselling cheap Russian, Venezuelan and Iranian crude by refining it why can't someone in Pakistan bother to look at this?
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MalikSaabSays Dec 13, 2023 09:09am
@cool, Because those who care about the country are sitting ducks, while those who have taken authority by force don't care enough.
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Haq Dec 13, 2023 09:57am
In past 10 yrs too many investors jumped in to the Oil Marketing & Distribution business, without have proper storage, network & marketing strategies. Some of them will found involved in malpractices like; smuggling, money laundering, under invoicing... with emphasis on imports, ratter than utilizing local refining / blending. This significantly impacted import bills, plus decision by PTI govt to introduce imported Euro-V. Number of OMCs gone bankrupt, failed on govt. criteria & corrupt practices. What we are witnessing is major correction, as petroleum sales failed to grow due to various factors, major ones are taxes & slow economy. Acquisition of 40% GO stake by ARAMCO.... instead of much hyped billion $ refinery cum petrochemical project is disappointing & failure of govt / SIFC
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asif Dec 13, 2023 02:53pm
our Govt have no plan except selling its precious Assets.And the selling money will again..............
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Muhammad Javaid Iqbal Dec 13, 2023 09:13pm
This deal would have far reaching affects on confidence level of foreigner and boosting stock market.
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Muhammad Arif Dec 14, 2023 11:21am
Though it's not mandate of this interim govt but its bent upon doing whats not its business like selling this asset. Then again it's Pakistan where we don't have any law . Its 250 million people at mercy of 250 corrupt and lawless unelected officials . Unfortunately people have been scared down with power and threats. Not for long though.IA
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Mubashar iqbal Mubashar iqbal Dec 14, 2023 02:45pm
Deer sir my experience is Gulf 8 year in Dubai store keepar but I'm in Pakistan I need a job
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