Dubai: Emirates National Oil Co., Dubai’s government-run energy company, is expanding into agricultural commodities to diversify its business and offset past losses from retail fuel sales.
ENOC’s new unit will deal mainly in wheat and rice, Chief Executive Officer Saif Al Falasi said Thursday in an interview in Dubai. The company will give the new business about two years to become profitable, he said.
Dubai has become the Middle East’s most dynamic trading hub, housing bankers and lawyers serving the wider region by building its economy on trade and transport links. Yet UAE oil companies have until recently lost money from selling subsidised gasoline. The government, seeing its income squeezed by lower crude prices, scrapped the aid and raised retail fuel prices in August.
ENOC decided to open the agricultural unit “when we were losing a lot of money to the subsidies,” Al Falasi said. He didn’t say when the unit began trading or specify the volume of operations.
The company operates a refinery in Dubai’s Jebel Ali Port, runs a chain of service stations and trades refined products such as gasoline, diesel and jet fuel. Building a commodity-trading business marks the company out in the Gulf, where countries mainly buy foodstuffs and agricultural products for domestic use or food processing.
ENOC this year bought Dragon Oil Plc, an energy explorer in which it already owned a majority stake, in an acquisition totalling almost $3 billion (Dh11 billion). The transaction gave ENOC full control over Dragon’s production in Turkmenistan as well as an outlet for further exploration.
— Bloomberg
