Vitol in Talks to Buy Stake in Pakistan's Hascol Petroleum

  • World's biggest oil trader eyes fuel retailer, storage company
  • Agreement would follow deals in West Africa, Latvia this year

Vitol Group, the world’s largest oil trader, is in talks to buy a stake in Pakistan-based fuel retailer and storage provider Hascol Petroleum Ltd.

The companies are “exploring a possible transaction which could involve an investment by Vitol in the shares of Hascol and also a supply-rights arrangement,” Zeeshan Ul Haq, Hascol’s company secretary, said in a filing to the Karachi Stock Exchange. Hascol’s board has been asked to evaluate the potential deal and allow Vitol to conduct due diligence.

“It will be a game changer for Hascol to have Vitol as a shareholder,” Mumtaz Khan, the chairman and chief executive officer of Hascol, said by e-mail. “It should help us to import products at more competitive prices.”

The world’s biggest oil traders, including Vitol and Trafigura Pte Ltd., are taking stakes in fuel service stations and marketing businesses in Asia, Africa and elsewhere to complement their crude and oil-product trading operations. They’re also investing in storage companies to profit from the current contango market structure, whereby cheap crude can be stockpiled now and sold later at a higher price.

Vitol teamed with private-equity firm Helios Investment Partners in June to buy a majority stake in Nigeria-based Oando Plc’s West African service-station, fuel-storage and supply business for $276 million. Trafigura is the largest shareholder in Puma Energy Group Pte Ltd., which has operations throughout Africa, including Angola, Ghana and the Democratic Republic of Congo.

Share Gain

Hascol markets and stores fuel oil, diesel, gasoline, jet fuel, liquid petroleum gas and lubricants in Pakistan, South Asia’s biggest economy behind India. Its shares, which listed in Karachi last year, have almost tripled in 2015.

The company has acquired new storage facilities including two terminals in Karachi to store petrol and diesel. It also imports and distributes Fuchs Petrolub AG automotive lubricants.

Khan is the largest shareholder with a 35 percent stake, according to data compiled by Bloomberg.

A Vitol spokeswoman declined to comment.

The slump in crude prices has spurred oil-storage and infrastructure deals by commodity traders. Varo Energy, a venture between Vitol and private-equity giant Carlyle Group, agreed in May to merge with Argos Energies to create a western Europe-focused refining, pipeline and distribution company.

Vitol also paid $80 million to increase its stake in Latvian terminal and pipeline operator Ventspils Naft AS to 93 percent in September and may buy the remaining shares.

Gunvor Group Ltd. agreed this month to buy its third refinery in Europe with a deal to purchase the Europoort plant in Rotterdam from Kuwait Petroleum International.

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