Abu Dhabi oil giant eyeing franchise opportunities in the kingdom
Adnoc Distribution unveiled plans to expand their distribution locations into Dubai in the second half of 2018, and further across the Gulf into Saudi Arabia.
The plans come on the heels of an announcement by Adnoc to list at least 10 percent share of its fuel retail business on the capital’s bourse.
“Dubai is the only emirate that we don’t supply today,” John Carey, deputy CEO of Adnoc Distribution, told Arabian Business.
“Our intention is to open two stations in 2018 and to grow our position beyond that in the next five years to get to having a strong position,’ he said in an exclusive interview on Monday.
The plans are hinged on the “excitement in Dubai surrounding 2020,” Carey said.
“We feel we have a role to play across all of the UAE. We have the infrastructure in place of being able to supply Dubai today."
Moving into Dubai is a response to burgeoning consumer demand for fuel in the UAE’s commercial hub that is “underserviced.”
“We know the frustration people have about the queues and the wait and we feel there is space for us within that Dubai market, to be able to grow alongside the current supply positions within Dubai," Carey said.
“When you look at what we’re doing with the Adnoc distribution I think it’s a logical extension."
The exact locations of the two planned Adnoc petrol stations and convenience stores have already been identified, but not yet disclosed to the public, he said.
In 2017, Adnoc opened more than 20 new stations in Abu Dhabi and the Northern Emirates.
The state oil giant also voiced plans to branch out their distribution operations into Saudi Arabia, as monumental reforms create new windows of opportunity across the kingdom.
“We see Saudi and the historic changes in Saudi as a potential opportunity for us in the future,” he said, indicating that talks are underway for a low-risk investment in a franchise model.
“We will look at opening franchise, we are working with partners but we won’t heavily invest in Saudi in infrastructure.”
The group’s main focus, however, will be consolidating their market share in the UAE, Carey added.
“Our base and our strength is across the UAE, and it is our priority over the next couple of years, and we don’t want to distract from that.”
Back in July, Adnoc CEO Sheikh Sultan Al Jaber outlined plans to actively manage the capital and assets of the Adnoc Group by listing a stake in its service station unit on the Abu Dhabi stock exchange.
“It’s obviously a very unique business in terms of the market leadership position across the UAE and the stable margins. Combined with that a lot of the initiatives and growth strategies have resonated very well across the region and externally,” Carey said, speaking from London.
Adnoc’s distribution arm is the ‘crown jewel’ of the Adnoc Group, focused on the retail, lubricants and downstream operations.
The price range for the IPO has not been publicly disclosed, but the company is looking at an IPO minimum of 10 percent, of the business, he said.
“As we speak today the pricing is being determined,” he said.
The decision was made to “more actively manages our business, and our capital and assets.”
“It internationalises the framework and perspective of the business and gives a level of independence and drive for the organisation,” Carey explained.
As one of the world’s leading upstream and downstream businesses, with a shipping arm and refineries processing more than 900,000 barrels per day, the group plans to grow its revenues with broad investment in its petrochemicals and refining activities, Carey noted.
“Adnoc as a group is expanding, it’s putting huge investment across its petrochemical business and across its refining business,” he said.
The company is also committed to continue their investment in technology to enable faster payments at pumps, and in smart technology such as their RFID [smart wallet] he added.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.