Dubai oil firm buys Dragon in $2bn deal

DUBAI&rsquo;S state-owned oil refiner is buying oil explorer Dragon Oil for $1.9bn (&pound;1.2bn) as the emirate seeks a safe haven from the recession-hit property market.<br /><br />The Emirates National Oil Company (Enoc) agreed to pay 455p a share for the 48 per cent of Dragon it did not already own, valuing the Turkmenistan-focused oil firm at $2.36bn.<br /><br />Enoc&rsquo;s investment in Dragon signals a change in the emirate&rsquo;s investment strategy after suffering a real estate crash in the financial crisis.<br /><br />In January, Dubai-based Dragon pledged to boost production in 2009 and said it was confident about weathering falling global oil prices.<br /><br />One of Dragon&rsquo;s 10 largest minority shareholders said, however, that yesterday&rsquo;s offer was fair, given &ldquo;limited upside&rdquo; in Turkmenistan, where uncertainty over energy reserves has cooled foreign interest in oil and gas infrastructure.<br /><br />Analysts and investors said the stock was probably worth more than Enoc offered, but it was the best shareholders would get.<br /><br />Merrill Lynch analyst Taleh Musayev said &ldquo;given that another bidder is not likely to emerge, the offer is likely to go through&rdquo;.<br /><br />Peter Hutton at stockbroker NCB advised investors to seek more.<br /><br />Shares in Dragon Oil closed yesterday up 36.5p, or nearly nine per cent, at 446.5p.<br /><br />Dragon&rsquo;s main assets are oil and gas fields in Turkmenistan, which has attracted oil firms after new leadership led to a more open approach to foreign investment.<br /><br />Enoc, owned by the emirate&rsquo;s sovereign wealth fund Investment Corporation Dubai, runs service stations, fuel terminals and oil tankers in the Gulf.<br /><br />Mustafa Alani at Dubai-based Gulf Research Centre said: &ldquo;The property sector has been hit hard. Oil will always remain profitable.&rdquo;<br /><br />The Dragon Oil purchase comes as the emirate seeks to restructure about $80bn of debt.