Saudi oil firm sets foot in Kenya through acquisition of US-Valvoline


NAIROBI, Kenya - Saudi Arabia state-owned oil producer -Aramco, is set to enter the Kenyan market through the acquisition of US motor oil and lubricants group Valvoline.

The news of Aramco's entrance into Kenya was announced by the Competition Authority of Kenya (CAK) and they had given the green light for Aramco Overseas Company, the investment arm of Saudi Aramco.

CAK Director-General Wang’ombe Kariuki in a notice “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.”

Saudi Aramco which is the world's largest oil firm has now acquired the Kenyan operations of VGP Holdings as part of a global deal worth $2.65 billion.

This acquisition by the Kingdom of Saudi Arabia state-owned oil producer is set to shake the waves within Kenya’s fuel lubricants market which is currently dominated by multinational firms from the west.

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.

It's expected that Aramco's unit will 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.

The support involves finances, supply chain management, technical support, and other administrative services.

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.

Data from the Petroleum Institute of East Africa (PIEA) states that the consumption of lubricants in Kenya’s market has been growing over the past years, prompting Saudi Aramco first disclosed its intention to acquire Valvoline Global for $2.65 billion in a deal that the Saudi oil firm says will boost its efforts for a wider distribution network.
In 2019 Aramco firm reported its highest quarterly profits since listing its shares with its net income rising to $39.5 billion in the first three months of the year, reflecting an 82 percent increase from a similar period last year.

The group’s total production including gas rose to 13 million barrels a day of oil equivalent, up from an average of 12.3 million last year.
The Saudi Arabian government owns 94.2 percent of Aramco.

Saudi owns more than 11,000 retail fuel stations worldwide with locations in China, South Korea, the United States, and Japan.

However, at the moment, it remains unclear if Saudi Aramco will use the acquisition to enter the local wholesale market for fuel which could trigger price reductions for oil marketers, ultimately passing the benefits to consumers.


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