World’s largest oil firm enters Kenya through acquisition of the firm
World's largest oil firm; Aramco enters Kenya through the acquisition of US motor oil and lubricants group Valvoline
World’s largest oil firm; Aramco enters Kenya through the acquisition of US motor oil and lubricants group Valvoline.
The largest oil producer in the world, Saudi Aramco, is set to enter the Kenyan market through the acquisition of US motor oil and lubricants group Valvoline which has a presence locally.
Saudi Aramco is the largest oil company in the world and the second most valuable after Apple with a market capitalization of $1.82 trillion (Sh223.86 trillion). Apple is valued at $2.154 trillion (Sh264.94 trillion).
Aramco Overseas Company, the investment arm of Saudi Aramco, received approval from Kenya’s Competition Authority (CAK) to purchase VGP Holdings’ activities in Kenya as part of a $2.65 billion global agreement.
The acquisition looks set to trigger shifts in Kenya’s fuel lubricants market that is currently dominated by multinational firms such as Vivo – seller of Shell products —, Total Energies, and Rubis.
“The Competition Authority of Kenya excludes the proposed acquisition of control of VGP Holdings LLC by Aramco Overseas Company B.V from provisions of the Act,” CAK Director-General Wang’ombe Kariuki said in a notice.
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The exclusion was provided on grounds that it will not affect competition and that the US motor oil and lubricants group remains small in Kenya with annual sales of Sh14.2 million.
The Aramco unit is expected to seek a larger share of Kenya’s lubricants sector and is expected to tap new markets, including fuel importation.
Aramco Overseas Company offers support to operations of Saudi Aramco in Europe, Asia, Australia, and Africa but excludes the Saudi Arabia and North American markets.
Valvoline deals in lubricants such as brake fluids, gear oils, greases, and transmission fluids, and its acquisition by Saudi Aramco will offer it financial muscle and a shareholder who has a focus on Africa.
94.2 percent of Aramco is owned by the government of Saudi Arabia.
Saudi Arabia owns more than 11,000 retail gas stations around the world, with some of them situated in China, South Korea, the US, and Japan.
It is yet unknown whether Saudi Aramco will use the acquisition to enter the regional wholesale market for fuel, which might lead to price decreases for oil marketers who would then pass the savings along to customers.
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