Business | Oil & Gas

Motorists still sceptical about supply disruptions

Demand may be the problem, analysts say

  • By Aya Lowe, Staff Reporter, Gulf News
  • Published: 00:00 June 8, 2011
  • Gulf News

Cars jam an Adnoc pump station in Sharjah
  • Image Credit: Atiq-Ur-Rehman/Gulf News
  • Cars jam an Adnoc pump station in Sharjah as motorists continue to endure petrol shortages in the emirate. Motorists in Dubai, Sharjah, Ras Al Khaimah, Umm Al Quwain, Fujairah and Ajman remain sceptical that ‘upgrading work' at Enoc and Eppco stations is the cause of continued petrol shortages
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Dubai: Motorists in Dubai, Sharjah, Ras Al Khaimah, Umm Al Quwain, Fujairah and Ajman remain sceptical that ‘upgrading work' at Enoc and Eppco stations is the cause of continued petrol shortages.

A Gulf News reader who wishes to remain anonymous said there is an Enoc pump on Emirates Road before the Ajman exit which was previously closed for upgrading but is now open with fuel that is being rationed.

"The Enoc pump 1205 on Emirates road is a new one. Until yesterday they were saying it's going for upgrade and suddenly you can find fuel available there.

"Now they are selling fuel, but each car gets only allowed fuel worth Dh50," he said.

Readers' comments come a day after Khalid Hadi, head of corporate communications for Enoc/Eppco, told the media that some of the closures of petrol stations were due to ongoing upgrades of dispensing equipment.

No sign of construction

But another reader said he's seen recently renovated pumps being closed for maintenance without any sign of construction.

"I don't believe what they're saying is true. There was a recently renovated petrol pump in Sharjah which I do believe does not require any upgrade. It is also closed," said George, a resident in Sharjah.

Other motorists have reported seeing no construction at any of these stations and are frustrated by the lack of information offered by staff.

"Staff at these stations have no idea about what is happening, all they know is the supply truck has not arrived.

If it was technical upgrading, then of course the company would not make the whole city affected at once, it would be station for station," said Ed.

Demand has been one issue behind the shortage problems, analysts say.

"Throughout the Middle East and North Africa in hydrocarbon rich countries, gasoline, petrol and diesel have been very generously subsidised as one way of giving the resource back to the population.

"The flip side is that the population becomes used to some of the world's cheapest motor fuels. It creates a wasteful consumption pattern which is increasingly starting to eat into the resources," said Samuel Ciszuk, a Middle East energy analyst at IHS Global Insight.

According to Dalton Garis, associate professor of economics at the Petroleum Institute, Abu Dhabi, this increased demand puts pressure on supply.

"Demand has increased which could pressure the refineries themselves. After today retailers and suppliers will probably be devising linear programmes. Just like any energy company that provides electricity needs a plan B and C if anything goes down, we don't necessarily think about this in regard to our filling stations," said Garis.

Domestic demand has risen considerably throughout the UAE with annual demand growth estimated at 10 per cent.

While there is a general consensus that these recent shortages are a result of rising demand, analysts are also only able to speculate as to why these shortages are occurring now.

Cash shortage

Kate Dourian, Middle East editor at Platts, says the recent shortages are a result of a shortage of cash on the part of the petrol retailers.

"Emarat, like the other two main gasoline suppliers, Enoc and Eppco, has for years been operating at a loss because it buys product at international prices and sells at government-regulated prices below market value," said Dourian.

Oil retailers such as the Abu Dhabi National Oil Company (Adnoc), Emirates National Oil Company (Enoc), the Emirates Petroleum Products Company (Eppco) and Emarat bear subsidies on sales which are set by the government.

According to Dourian, evidence of their financial struggle has been highlighted by Emarat's payment disputes on gasoline and diesel supply contracts with two trading companies and one bank.

Emarat did not respond when contacted by Gulf News on Tuesday.

Comments (3)

  1. Added 15:24 June 8, 2011

    This shortage seems like a good warning for residents who uses petrol like see water.

    Biju, Dubai, United Arab Emirates

  2. Added 14:13 June 8, 2011

    This is just a drama before increasing the price.. please expect a great increase in fuel price soon

    Nishanth, Dubai, India

  3. Added 10:45 June 8, 2011

    Why don't they just start selling the petrol at normal prices to avoid shortages due to banking issues. This would cut down on car users, ease congestion and make Dubai more economical. I'm sure the oil companies would gladly do this.

    Samantha, Dubai, United Arab Emirates

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