Aramco to buy 40% equity stake in GO Pakistan

In a landmark development, Aramco, one of the world’s leading integrated energy and chemicals companies, on Tuesday signed definitive agreements to acquire a 40% equity stake in Gas & Oil Pakistan Ltd. (“GO”), the Saudi oil giant said in a statement posted on its website.

GO, a diversified downstream fuels, lubricants and convenience stores operator, is one of the largest retail and storage companies in Pakistan. On its website, GO says it has a network of over 1,100 retail outlets in Pakistan providing petrol, diesel and lubricants.

The transaction is subject to certain customary conditions, including regulatory approvals.

The planned acquisition is Aramco’s first entry into the Pakistani fuels retail market, advancing its strategy to strengthen its downstream value chain internationally.

“This transaction would enable Aramco to secure additional outlets for its refined products and further provide new market opportunities for Valvoline-branded lubricants, following Aramco’s acquisition of the Valvoline Inc. global products business in February 2023,” it added.

Mohammed Y. Al Qahtani, Aramco Downstream President, said: “Our second planned retail acquisition this year aligns with Aramco’s downstream expansion strategy, with a clear path ahead for growing an integrated refining, marketing, lubricants, trading and chemicals portfolio worldwide. GO has a significant storage capacity, high-quality assets and growth potential, which will help launch the Aramco brand in Pakistan.”

Experts react

Economic experts hailed the development as a positive for the cash-strapped South Asian country.

“From the economic front, this is definitely a positive,” Mustafa Pasha, Chief Investment Officer at Lakson Investments, told Business Recorder.

The analyst said that Pakistan has been using debt to pay off its debt, which is unsustainable.

“The only sustainable way to reduce the debt is by increasing exports or attracting Foreign Direct Investment (FDI) from abroad,” said Pasha.

Similar sentiments were expressed by Amreen Soorani, Head of Research at JS Global.

“Transactions like these would pave way for other large companies to invest in Pakistan,” she said.

Attracting FDI inflows has been a key challenge for the country, which fetched $525 million in July-October of FY24 as against $490 million in corresponding period of last fiscal year (FY23), showing an increase of $35 million.

However, Pasha noted that the current FDI model in Pakistan needs to change.

“It needs to be less extractive,” he said.

“The announcement by Aramco can have a knock-down effect, leading to greater interest from other global players. The thing to see now is that the upcoming investment is put to productive use and used as a showcase for other investors,” added Pasha.