Total interested in exploring Saudi petrol station market with Aramco

Total and Aramco are considering the joint acquisition of petrol station operators in Saudi Arabia, two sources familiar with the matter said. (Reuters)
Updated 26 April 2018

Total interested in exploring Saudi petrol station market with Aramco

LONDON: Total is exploring options to enter Saudi Arabia’s petrol station market in conjunction with Saudi Aramco, as international interest in the Kingdom’s fuel distribution sector hots up.

A spokesman for the French energy major told Arab News that “several possibilities (are) under evaluation” for entering the sector, following the signature of an MoU with Aramco earlier this month “to evaluate the feasibility of jointly acquiring a retail service station network in Saudi Arabia.”

Bloomberg reported yesterday that the two firms are considering jointly acquiring Tas’helat Marketing Company, which operates petrol stations in the Kingdom under the “Sahel” brand, citing people with knowledge of the matter.

The Total spokesman declined to comment on the report.

Aramco is the sole distributor to Saudi Arabia’s petrol stations, but has no stations of its own, despite announcing plans to enter the sector in 2014.

Total and Aramco’s evaluation of the sector follows an uptick in interest from regional distributors.

Dubai-based ENOC in February opened what it described what it described as Saudi Arabia’s largest petrol station in the Modon industrial area of Riyadh, its 10th in the Kingdom. The company said at the time it planned to open further distribution facilities in the country later this year, giving no further details.

Abu Dhabi’s ADNOC Distribution meanwhile plans to open its first petrol station in Saudi Arabia later this year, following the award of an operating license last week.

Expansion into Saudi Arabia is a key strategic initiative of the fuel retailer, which operates nationwide in the UAE apart from in Dubai, and contributed to the success of its IPO on the Abu Dhabi stock market at the end of last year.
 
But a big play into the sector by Total and Aramco may well disrupt ADNOC Distributions plans, analysts have cautioned.

“In the pre-IPO presentation, ADNOC Distribution did not provide sufficient details for analysts to work in the potential for (Saudi operations) into their models,” Sanyalak Manibhandu, head of research at FAB Securities, told Arab News.

“Much was made of the potential of improving the standard of KSA service stations.  If Aramco/Total are really going to compete on the service station forecourt and the adjacent grocery store, the potential will not be so good for competitors.”

Oman Oil Marketing Company earlier this month announced plans for a petrol station in Saudi Arabia, its first outside the Sultanate, after receiving an operating license in the Kingdom in 2015.

BMI Research last month forecast that Saudi car sales will rise by 4 percent in 2018, after having fallen by over 20 percent in 2016 and 2017.

But last year’s lifting of a ban on female drivers will have only a moderate impact on the market, the research firm said, coming into effect only in June, with many families already owning cars for use by women but are currently driven by paid drivers.

The agreement by Total and Aramco to explore options in the fuel distribution sector was signed on April 10, alongside the signing of an MoU between the two firms to build a large petrochemical complex in Jubail, integrated downstream of Aramco’s SATORP refinery.


Economists fear a US recession in 2021

Updated 19 August 2019

Economists fear a US recession in 2021

  • Trump’s higher budget deficits ‘might dampen the economy’

WASHINGTON: A number of US business economists appear sufficiently concerned about the risks of some of President Donald Trump’s economic policies that they expect a recession in the US by the end of 2021.

Thirty-four percent of economists surveyed by the National Association for Business Economics, in a report being released Monday, said they believe a slowing economy will tip into recession in 2021. 

That’s up from 25 percent in a survey taken in February. Only 2 percent of those polled expect a recession to begin this year, while 38 percent predict that it will occur in 2020.

Trump, however, has dismissed concerns about a recession, offering an optimistic outlook for the economy after last week’s steep drop in the financial markets and saying on Sunday, “I don’t think we’re having a recession.” A strong economy is key to the Republican president’s 2020 reelection prospects.

The economists have previously expressed concern that Trump’s tariffs and higher budget deficits could eventually dampen the economy.

The Trump administration has imposed tariffs on goods from many key US trading partners, from China and Europe to Mexico and Canada. 

Officials maintain that the tariffs, which are taxes on imports, will help the administration gain more favorable terms of trade. But US trading partners have simply retaliated with tariffs of their own.

Trade between the US and China, the two biggest global economies, has plunged. Trump decided last Wednesday to postpone until Dec. 15 tariffs on about 60 percent of an additional $300 billion of Chinese imports, granting a reprieve from a planned move that would have extended duties to nearly everything the US buys from China.

The financial markets last week signaled the possibility of a US recession, adding to concerns over the ongoing trade tensions and word from Britain and Germany that their economies are shrinking.

The economists surveyed by the NABE were skeptical about prospects for success of the latest round of US-China trade negotiations. Only 5 percent predicted that a comprehensive trade deal would result, 64 percent suggested a superficial agreement was possible and nearly 25 percent expected nothing to be agreed upon by the two countries.

The 226 respondents, who work mainly for corporations and trade associations, were surveyed between July 14 and Aug. 1. That was before the White House announced 10 percent tariffs on the additional $300 billion of Chinese imports, the Chinese currency dipped below the seven-yuan-to-$1 level for the first time in 11 years and the Trump administration formally labeled China a currency manipulator.

As a whole, the business economists’ recent responses have represented a rebuke of the Trump administration’s overall approach to the economy.

Still, for now, most economic signs appear solid. Employers are adding jobs at a steady pace, the unemployment rate remains near a 50-year low and consumers are optimistic. US retail sales figures out last Thursday showed that they jumped in July by the most in four months.