Five Egypt's EGX-listed firms among top beneficiaries of oil shock

Cairo – Five Egyptian petrochemical firms are most likely to benefit from a possible short-term supply shock, a report released MubasherTrade Research showed.

Globally, oil prices reached their highest level in four months after Saudi Aramco’s oil facilities at Abqaiq and Khurais have been attacked with drones, leading to a 5% cut of world oil production.

MubasherTrade Research expects such increases in oil prices to last for a short-term period; however, the following petrochemical companies listed on the Egyptian Exchange (EGX) are expected to benefit the most:

Sidi Kerir Petrochemicals

Sidi Kerir Petrochemicals will benefit from the increased prices of its end products, especially polyethylene, which are highly correlated with the global oil prices.

In addition, Saudi rivals to Sidi Kerir Petrochemicals, including Saudi Basic Industries Corp. (SABIC), announced a reduction in feedstock supplies.

Egypt Kuwait Holding

The petrochemical segment of the Egypt Kuwait Holding (EKH) will also benefit from the rising international prices of petrochemicals.

During the first half of 2019, EKH, through its stake in SPREA Misr, has contributed 24.2% of the company’s consolidated sales revenues.

Alexandria Mineral Oils Co

Moreover, Alexandria Mineral Oils Co (AMOC) will also be among the top beneficiaries on the EGX.

Launched in 2002, oil refining firm AMOC has a capacity of around 34,440 barrels per day.

“Almost 40-45% of the company’s production sales values are generated by fuel oil which needs to be cracked down into a higher value added and environmentally friendlier refined petroleum products,” the report added.

In addition, the oil refining company aims to secure a funding to set up a fuel oil refining project.

Qalaa Holdings

Qalaa Holdings is also expected to be one of the beneficiaries if the company’s Egyptian Refining Company (ERC) starts commercial production amid the increasing oil prices.

The company holds a 13% stake in the ERC which is expected to be “the most technologically advanced oil refining firm in Egypt with a capacity of [100,000] barrels per day of refined petroleum products ([MubasherTrade Research’s] estimates) of which the Euro-v diesel represent 48% of the company’s total annual production volume,” the report highlighted.

Maridive and Oil Services

Maridive and Oil Services could benefit if the damage at Saudi state-owned oil firm Aramco “was severe” and lasting for a long time, which is ruled out by MubahserTrade Research.

However, Maridive may benefit “if the damages were related to offshore oil infrastructure for which [Maridive] may bid to conduct the maintenance,” the report remarked.

In addition, higher oil prices will foster Maridive’s offshore construction services sector.

Furthermore, the company’s “offshore support vessels and offshore construction services segments may benefit from a breakthrough in sea water desalination plants business in Egypt and the world in the coming period,” the report added.