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.

 


US-Saudi business council reports $13bn in contracts

Updated 24 May 2019
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US-Saudi business council reports $13bn in contracts

  • Improved oil prices, combined with a government focus on spending, contributed to the rise, the council said

LONDON: The value of joint Saudi-US contracts rose to $13 billion in the first quarter of 2019, according to a business council report.

That marked the highest value of awarded contracts since the first quarter of 2015, the US-Saudi Arabian Business Council said.

The value of contracts awarded during the first quarter amounted to about half of the total value in all of last year, it added.

The contracts “included many vital projects, notably in the oil, gas, water and transport sectors,” Abdallah Jum’ah, the co-chair of the council, was reported as saying by Asharq Al-Awsat.

Energy was the top sector, with $3.1 billion of the value of contracts awarded, with many struck by Saudi Aramco. 

Improved oil prices, combined with a government focus on spending, contributed to the rise, the council said.

The construction sector also looks set for a recovery after many projects were put on hold due to the oil-price crash.

“If the pace of awarding construction contracts witnessed during the first quarter of 2019 continues for the rest of the year, the index of awarding construction contracts may return to the range we witnessed before the canceling and postponing of mega projects due to lower oil revenue,” the council said.