Karachi, Saudi Aramco, the world’s largest oil producer owned by the government of Saudi Arabia, has announced its foray into Pakistan’s oil market by acquiring a 40% stake in Gas and Oil Pakistan (GO). This significant move is set to reshape the competitive dynamics of Pakistan’s oil and gas sector.
According to JS Global, the entry of Saudi Aramco into Pakistan’s downstream oil sector is anticipated to have wide-ranging impacts. This includes altering the competitive landscape of the oil and gas sector, potentially increasing valuations for both listed and unlisted Oil Marketing Companies (OMCs), and indicating a surge in foreign direct investment confidence in the country.
The exact value of the transaction remains undisclosed. However, JS Research has analyzed two hypothetical scenarios with transaction equity values of US$100 million and US$200 million. By applying these transaction multiples to current listed OMCs, the analysis suggests that these companies are trading at a discount. Therefore, the revelation of the deal’s actual value could trigger significant market excitement.
The entry of a major player like Saudi Aramco into Pakistan’s oil marketing space is seen as a positive sign of heightened investor confidence and could usher in a new era of foreign direct investments in the country’s energy sector.
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