x Abu Dhabi, UAETuesday 23 January 2018

Higher oil brightens Qatar Fuel's prospects

Woqod, the Qatari fuel distribution company, yesterday announced a nearly 9 per cent jump in first quarter net profits and is expected to be buoyed further by rising oil prices

Higher oil prices are expected to buoy shares in Qatar Fuel, a distributor and retailer, as it expands its petrol station network and work on cross-country pipelines goes ahead.

The company, also known as Woqod, yesterday reported an 8.9 per cent rise in net profit in this year's first quarter compared with the same period last year, and announced plans to build an additional 12 petrol stations in Qatar. Woqod currently has nine petrol stations around the country.

Woqod also said it would build pipelines to transport oil products from a refinery in southern Qatar to the capital, Doha, and the new airport.

The pipeline project is being executed by Woqod's principal owner, Qatar Petroleum. The phase of the project to supply the new Doha International Airport with jet fuel is expected to be completed before the opening of the airport, due next year.

It is the latest sign of the company's dominance over the petroleum product industry in Qatar.

Qatar Petroleum floated its fuel storage and distribution arm as Woqod in 2002, and since then it has enjoyed almost exclusive marketing and distribution rights for petroleum products in Qatar.

Woqod has benefited from fixed prices for the distribution of petroleum products and fixed procurement costs from Qatar Petroleum, keeping margins stable and earnings solid.

Jet fuel accounted for about 35 per cent of overall revenue in 2009, and analysts are confident this area will further boost Woqod's revenue.

"We believe that construction of the airport, growth in air traffic and fleet expansion of Qatar Airways would bring in growth for this business segment," said Shantanu Sarkari, a Bank Muscat analyst who covers the stock.

He has a "hold" rating for Woqod.

Shares in the company fell 2.7 per cent to 252 rials yesterday. The stock price has more than doubled since the end of 2009.