Dubai: Emirates National Oil Co (Enoc) favours pricing gasoline for retail sale based on the market cost of crude oil, ending state-set rates for the fuel, its CEO said.
Enoc's retail division is losing money because the price of gasoline set by the UAE Government brings in less than it costs to buy the fuel, Saeed Khoury said in an interview with Al Ittihad newspaper published on Sunday.
Dubai generated about 5.5 per cent of its $62 billion (Dh228 billion) economy from oil and gas in 2007. Abu Dhabi holds most of the country's oil resources.
Enoc needs oil prices at about $40 to $45 a barrel to break even on gasoline sales, Khoury said in the report. Oil settled at $82.75 a barrel at the New York Mercantile Exchange on Friday, and last year's average price was $62.09. The government-set retail price for gasoline is Dh6.25 for a gallon of 95 octane fuel.
Rising oil prices have contributed to losses of hundreds of millions of dollars at the retail unit over the past five years, Khalid Hadi, Enoc's brand and marketing manager, said by telephone. Khoury's comments in Al Ittihad were reported correctly, he said.
Enoc, which is profitable as a group, is waiting for the Dubai government to say whether it must contribute gains to the emirate's budget.
His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, issued a decree last month ordering "government companies to transfer surplus income to the government's treasury." Enoc doesn't release earnings data, Hadi said.
Gulf countries are seeking to boost refining capacity as their economies require more fuel.
Enoc is set to open expanded units at its Jebel Ali refinery in Dubai in April after commissioning the facilities, Hadi said. The refinery's capacity will increase to 120,000 barrels a day.
Enoc, which last month dropped a bid for the rest of its exploration unit Dragon Oil Plc, plans to seek overseas assets this year to expand into upstream oil and gas exploration and production, Khoury said in Al Ittihad.