World largest oil firm Aramco enters Africa through $2.65 billion buyout deal – what you should know

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Saudi Aramco, the world’s biggest oil producer, is set to enter the Kenyan market through the acquisition of US motor oil and lubricants group Valvoline which has a presence locally.

The Competition Authority of Kenya (CAK) gave Aramco Overseas Company, the investment arm of Saudi Aramco, the nod to acquire the Kenyan operations of VGP Holdings as part of the global deal worth $2.65 billion.

The acquisition looks set to trigger shifts in Kenya’s fuel lubricants market that is currently dominated by multinational firms such as Vivo – seller of Shell products —, Total Energies and Rubis.

Saudi Aramco is the largest oil company in the world and the second most valuable after Apple with a market capitalisation of $1.82 trillion (Sh223.86 trillion). Apple is valued at $2.154 trillion.

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

The exclusion was provided on grounds that it will not affect competition and that the US motor oil and lubricants group remains small in Kenya with annual sales of Sh14.2 million.

The Aramco unit is expected to 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 for Africa.

Credit: Mark-Anthony Johnson