SINGAPORE: United Arab Emirates fuel retailer Emarat plans to cut its gasoline purchases nearly in half next year after transferring some of its pump stations in the northern emirates to Abu Dhabi National Oil Company, industry sources said.
Emarat will likely cut its gasoline requirements to about 600,000 to 700,000 tonnes next year from 1.2 million tonnes this year, one of the sources close to the matter said.
"This will reduce Emarat's losses by about 40 percent," the source said.
Emarat and ADNOC signed an initial agreement in May last year for ADNOC to take over Emarat pump stations in the poorer emirates of Sharjah, Umm Al Quwain, Fujairah and Ras Al Khaimah.
Gulf Arab countries heavily subsidize fuels as a social benefit.
But this leaves fuel retailers not linked to large oil producers like ADNOC taking billion dollar losses selling gasoline at well below their acquisition cost.
Emarat's reduced gasoline purchases may have minimal impact in the short term as ADNOC will likely need to fill the shortfall by importing the oil product instead, traders said.
But once Abu Dhabi Oil Refining Company (TAKREER) completes expansion of the Ruwais complex, the UAE's biggest refinery with a capacity of 415,000 barrels per day (bpd), towards the end of next year, gasoline imports will likely fall, they added.
The UAE is set to become self sufficient in gasoline by the end of 2014 with the Ruwais expansion.
ADNOC currently imports about 75,000 to 90,000 tonnes a month of gasoline, while Emarat imports about 50,000 to 60,000 tonnes a month buying the rest from the domestic market, traders said.
JET FUEL PURCHASES TO REMAIN STEADY
Emarat's jet fuel purchases for next year are likely to remain steady or slightly higher than this year's 850,000 tonnes, the first source said.
It will likely not have much gasoil to import next year as its main gasoil client the Federal Electricity and Water Authority is using more natural gas, the source added.
This reduced requirement caused Emarat to re-sell 15,000 tonnes of gasoil it had bought from ADNOC to another company in October, the source said.
Emarat imported about 7 cargoes of gasoil this year as part of fuel donations to Egypt, traders said. (Reuters)