Dubai-based Emirates National Oil Company (Enoc) has denied reports that Abu Dhabi National Oil Company (Adnoc) is poised to take over its fuel retail station chains in the UAE’s northern emirates, after the Dubai-owned companies had ceased deliveries.

Local media has reported that the federal government is moving to cancel the licences for Enoc, and its subsidiary Emirates Petroleum Products Company (Eppco), for Sharjah, Fujairah, Ras al-Khaimah, Umm al-Qawain and Ajman.

Adnoc has shown a strong interest in taking over the existing petrol stations in those emirates, according to the report.

Enoc on 5 July denied the reports. “Enoc reiterates that there has been no expression of interest by any organisation on taking over the operations of the company’s retail outlets,” the company said in a statement.

It did, however, concede that the shortages in the northern emirates was a matter of concern to the government.

“The concerned authorities are actively discussing the matter of fuel distribution in the northern emirates,” the statement adds.

Enoc had let pumps run dry in stations outside Dubai because of the increasing losses incurred by selling petrol at subsidised rates. It has to buy its products at a higher price on the international market. Enoc and UAE government-owned competitor Emarat have been reporting losses over the last years. As crude prices rise, those loss margins increase.

Analysts say Enoc’s move is an attempt by Dubai pull out of its commitment to provide fuel subsidies to its federal neighbours.

“The emirate of Dubai has seemed keen to back out of its historic obligation to cover the fuel needs of the northern emirate populations which, given the subsidy-fuelled demand growth, is costing Dubai increasing amounts of money,” says Samuel Ciszuk, energy analysts at the US’ IHS Global Insight.

Abu Dhabi could pick up those obligations at a far lower cost, as it produces its own crude and does not have to buy at international prices, adds Ciszuk.