UAE’s ENOC unveils major fuel retail expansion plan for Saudi

Dubai-based ENOC Group will increase its fuel retail network in Saudi Arabia to 124 service stations by 2030 from existing 14 petrol stations, according to a senior company executive.

Three new service stations will be opened by year-end and a further 10 by 2020-end, ENOC Retail managing director Zaid Alqufaidi said on Monday.

"We will have 124 service stations in Saudi Arabia by 2030. This number might be doubled, but we are evaluating [it] since [profit] margins are really thin. There is a review by the government to improve the margin and once that is approved, our plan B will kick in, and we will double the number.”

The margins in the fuel retail business in Saudi Arabia are one third the margin in the UAE, Alqufaidi revealed, adding an increase in the margins will also help all international operators to set up world-class service stations.

While ENOC is currently looking at organic growth, the company will look at acquisitions if it decides to double the number of service stations by 2030, Alqufaidi told Argaam.

“Since the margin is so thin, we have changed our strategy. We used to do greenfield, but now we are taking an existing service station and converting it into our service station. So the investment is actually brought to one third or one half,” he added.

Alqufaidi said he expected the fuel retail business in the Kingdom to contribute around 10 to 15 percent to ENOC’s bottom-line in the next 10 years.

ENOC official said that Saudi Aramco’s entry into the fuel retailing business will accelerate the process of getting the government’s nod for a margin revision. He expected the decision to come “very soon.”  

ENOC's expansion plan will provide employment to over 500 people across the Kingdom, Alqufaidi said.