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Abu Dhabi, UAETuesday 18 December 2018

Adnoc Distribution wins Saudi trade licence, eyes expansion

The company's move comes amid gradual removal of fuel subsidies in Saudi Arabia

The UAE’s largest fuel and convenience retailer posted higher first quarter profit on the back of a 13 percent rise in revenue. Courtesy Adnoc
The UAE’s largest fuel and convenience retailer posted higher first quarter profit on the back of a 13 percent rise in revenue. Courtesy Adnoc

Adnoc Distribution, UAE's biggest fuel distributor, said on Sunday it has secured a trade licence to operate in Saudi Arabia, its first foray outside the home market as the kingdom's planned phasing out of fuel subsidies attracts retailers.

The retail brand of state-owned Abu Dhabi National Oil Company was "committed to opening one service station in Saudi Arabia in 2018," it said in a statement.

Adnoc floated its fuel retail business in December on the Abu Dhabi Securities Exchange as it looked to build a leaner business model. Adnoc Distribution, which has also targetted Dubai for expansion, grew its net profit 6.8 per cent year-on-year in the fourth quarter on the back of higher oil prices and an increase in fuel sales. The company holds around 67 per cent of the UAE market share by number of retail fuel service stations.

Saudi Arabia's municipal and rural affairs ministry, which regulates the kingdom's fuel stations, issued the award in Riyadh. The kingdom said in its budget for 2018 in December that it would raise domestic prices for gasoline and jet fuel in this year as it looks to phase out subsidies completely by 2025.

The move has opened doors for private players such as Adnoc Distribution to enter the fray with more competitive fuel offerings.

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Adnoc Distribution, which holds a virtual monopoly in Sharjah and Abu Dhabi, has been targetting growing its footprint, with rollout of at least 13 new fuel stations this year, besides an expansion of three existing facilities.

The fuel retailer currently operates 360 service stations and 235 Oasis convenience stores, making it the biggest operator in the segment. The company also leases retail and other space at its service stations to tenants that include fast food chains such as McDonald’s, Burger King and KFC.

The distributor announced a tie-up in March with food retail group Urban Foods to open Géant-branded stores at a number of its service stations.