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.

 


Iraq’s southern oil exports hold near record in January

Updated 21 January 2019
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Iraq’s southern oil exports hold near record in January

  • Southern exports so far in 2019 close to 3.6 mbpd — tracker
  • OPEC-led oil supply cut deal started in January

LONDON: Oil exports from southern Iraq are holding close to a record high so far in 2019, according to shipping data and an industry source, which could raise questions over whether OPEC’s second-largest producer is following through on a deal to cut output.
Southern Iraqi exports in the first 21 days of January averaged close to 3.6 million barrels per day, according to tanker data on Refinitiv Eikon and separate tracking by an industry source. That’s close to December’s 3.63 million bpd — a monthly record.
The figures suggest there is little sign yet of lower supplies from Iraq, despite a deal by the Organization of the Petroleum Exporting Countries and allies to reduce output by 1.2 million bpd as of Jan. 1 to support the market.
“So far, no cuts,” the industry source said on Monday of Iraq’s export rate.
The south is the main outlet for Iraq’s crude. An Iraqi official, the director of Iraq’s Basra Oil Company, on Jan. 11 gave similar figures for January exports to those suggested by the tanker data and source.
Iraq, which has been expanding its oil export capacity, was reluctant to join a previous OPEC-led supply cut effort which began in 2017 and was at times OPEC’s least compliant member with the initiative.
To be sure, the OPEC-led deal applies to production, not exports. It is possible that Iraq could have cut production and maintained exports from crude held in storage, or reduced supply to domestic refineries.
Nonetheless, oil traders and analysts will be looking at exports to gauge whether the deal is lowering supply to the global market. So far, Iraq’s shipments abroad from the north haven’t declined significantly either.
Iraq’s northern exports appear to have held steady in January at about 400,000 bpd, according to tanker data compiled by Reuters and the industry source. That is still far below levels of more than 500,000 bpd in some months of 2017.
Baghdad says it will stick to the accord. Oil Minister Thamer Ghadhban said on Jan. 4 Iraq would keep production at the level of its OPEC target in the first half of 2019.
Under the deal, Iraq agreed to cut production by 141,000 bpd to 4.512 million bpd as of Jan. 1.