DUBAI STATE-CONTROLLED OIL firm Dragon Oil has dropped a bid for rival firm Petroceltic as the price of the commodity hit a 5-year low.
Dragon Oil, which is majority owned by the Dubai government’s Emirates National Oil Company (ENOC), today abandoned plans for a buyout of the Dublin-headquartered company which was going to be worth about €627 million.
It said it no longer planned to make an offer for Petroceltic “in light of prevailing market conditions”.
Oil- and gas-producer Petroceltic previously said it was waiting for ENOC to sign off on a formal offer before the possible buyout went any further.
The news came as the price for Brent crude oil hit its lowest ebb in 5 years with the per-barrel price continuing to fall off a cliff while the product continues to flood into the market. The price for the commodity, which is the benchmark for about two-thirds of the oil market, dropped below $69 (€55.42) a barrel today before rebounding slightly.
The once-dominant OPEC alliance, made up of big oil producers like Iran, Iraq and Saudi Arabia, has been under pressure to react to a global glut in the commodity, mainly thanks to a boom in US production from shale oil fields.
But last week, instead of cutting output in an attempt to push up oil prices, OPEC chose to keep pumping out the same volume it has been for the past three years.
Analysts said the move will put pressure on other producers who can’t compete at the lower prices and will also stall exploration and development of new wells.
Meanwhile, Petroceltic said most of its current production was sold at fixed gas rices in Egypt and was not affected by “short-term oil price volatility”.
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