UAE’s ADNOC looks to smarten up forecourt experience in Saudi Arabia

ADNOC has been at the forefront when it comes to developing the retail outlets that are becoming a big feature on station forecourts across the Arabian Gulf. (Reuters)
Updated 23 April 2018
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UAE’s ADNOC looks to smarten up forecourt experience in Saudi Arabia

  • ADNOC's Oasis chain has 235 outlets in the Emirates, and it recently increased its profile in this business with a deal with French hypermarket group Geant to convert 10 stores to the world-famous brand.
  • ADNOC has 45 years experience of operating petrol stations in the UAE, and can be relied on to provide a top quality product on a fast roll-out schedule.

DUBAI: ADNOC Distribution’s new license in Saudi Arabia allows it to own, operate and manage fuel service stations, which could be a big thing for anybody stopping to fill up with gas, and grab a sandwich and coffee across the Kingdom in years to come.

ADNOC may look and sound like a petrol pumper, and a large part of its business is in supplying fuel to service stations as well as wholesale to big government entities and airlines.

But the most profitable and fastest growing segment consists of owning and running the retail outlets that are a big feature on station forecourts across the Arabian Gulf. It owns and operates more shops than any other retailer in the UAE, with a virtual monopoly across most of the country.

Its Oasis chain has 235 outlets in the Emirates, and ADNOC recently increased its profile in this business with a deal with French hypermarket group Geant to convert 10 stores to the world-famous brand. So, while motorists will still stop mainly for “special” or “super”, they will linger for KFC or McDonalds, or increasingly the high quality fresh food the French do so well.

It all makes a great deal of sense for Saudi citizens in the midst of a consumer revolution sparked by the Vision 2030 transformation of the economy. Female drivers, the logic goes, are even more likely than men to linger for a bit of shopping once they’ve filled up, or will want to get the family some snacks or even full dinner on the way home. All of which begs the question: why does it take a UAE company to see the market gap in the Kingdom?

With a car-crazy population of 30m, and an apparently inexhaustible appetite for fast food and shopping, surely there were local entrepreneurs who could take advantage of that market opportunity?

Part of the answer is that ADNOC has been doing it or a long time now, with 45 years of operating petrol stations in the UAE, and can be relied on to provide a top quality product on a fast roll-out schedule. The one station it is pledged to open this year will surely be followed quickly by others across the Kingdom. But the main reason lies in the highly fractured nature of the petrol station business in Saudi Arabia.

There are some big operators, but the national oil company, Saudi Aramco, does not enjoy the near monopoly that ADNOC does in the UAE. Many petrol stations are owned by smaller businesses that lack the scale, and the ambition, to aim for something bigger. The removal of fuel subsidies will give them flexibility to be more competitive on price for their basic product, while the entry of ADNOC may give them an inventive to give Saudi consumers what they increasingly want.

There is no doubt it is a potentially lucrative market. The retail side of the ADNOC business was the main reason the UAE company was able to achieve a market capitalization of more than 30 billion dirhams when it went public in an initial public offering in Abu Dhabi last year.

 


Abu Dhabi aims to lure start-ups with investment in new technology hub

Updated 24 March 2019
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Abu Dhabi aims to lure start-ups with investment in new technology hub

  • The initiative will help Abu Dhabi reduce reliance on oil
  • Mubadala hopes to attract Chinese and Indian companies

ABU DHABI: Abu Dhabi will commit up to $272 million to support technology start-ups, it said on Sunday, in a dedicated hub as part of efforts to diversify its economy.

US tech giant Microsoft will be a strategic partner, providing technology and cloud services to the businesses that join the hub as the capital of the United Arab Emirates continues its push to reduce reliance on oil revenue.
Abu Dhabi derives about 50 percent of its real gross domestic product and about 90 percent of central government revenue from the hydrocarbon sector, according to ratings agency S&P.
The emirate launched a $13.6 billion stimulus fund, Ghadan 21, in September last year to accelerate economic growth. Ghadan means tomorrow in Arabic. The new initiative, named Hub 71, is linked to Ghadan will also involve the launch of a $136 million fund to invest in start-ups, said Ibrahim Ajami, head of Mubadala Ventures, the technology arm of Mubadala Investment Co.
The goal is to have 100 companies over the next three to five years, Ajami said. “The market opportunities in this region are immense,” he added.
Mubadala, with assets of $225 billion and a big investor in tech companies, will act as the driver of the hub, located in the emirate’s financial district.
Softbank will be active in the hub and support the expansion of companies in which it has invested, Ajami said, adding that Mubadala is also aiming to attract Chinese and Indian companies, among others.
Mubadala which has committed $15 billion to the Softbank Vision Fund, plans to launch a $400 million fund to invest in leading European technology companies.
Incentives mapped out by the government include housing, office space and health insurance as part of the $272 million commitment, Ajami said.
Abu Dhabi will also announce a new research and development initiative on Monday linked to the Ghadan 21 plan, according to an invitation sent to journalists.