ADNOC Distribution participates primarily in the retail transportation fuels, wholesale fuels and forecourt convenience store markets in the UAE, with a particularly dominant position in the Emirate of Abu Dhabi, as well as the UAE and international lubricants market, the UAE LPG market, and the market for CNG to fuel natural gas vehicles in the UAE.
United Arab Emirates and Abu Dhabi
According to the International Monetary Fund, the UAE is the second largest economy in the Gulf Cooperation Council (GCC) after Saudi Arabia, based on nominal Gross Domestic Product (GDP).
Approximately 35.5% of the UAE’s GDP in 2016 was attributable to the oil and gas industry. By diversifying its economy away from dependence on the oil and gas sectors, the UAE is viewed as being less vulnerable to energy price fluctuations than some of its GCC neighbors due to the growth of non-oil sectors in the country, particularly trading, finance, real estate and tourism.
The UAE is viewed as one of the best foreign investment destinations in the GCC due to its relatively high rate of economic growth; rising levels of disposable income; moderate rates of inflation; and a rapidly growing population that reached approximately 10.0 million in 2017.
Abu Dhabi, the capital of the UAE, is a key center of the UAE’s political, industrial and cultural activity and has played an important role in the development of the UAE and its growing economy. Abu Dhabi contains approximately 95% of the UAE’s oil reserves and approximately 92% of the UAE’s gas reserves.
ADNOC Distribution’s primary markets consist of the following sectors:
- Retail transportation fuels: ADNOC Distribution is the UAE’s leading operator of retail fuel service stations with 67% market share and the sole retail fuel operator in Abu Dhabi and Sharjah.
- Wholesale fuels: The UAE wholesale fuels market consists primarily of sales of gasoline and gas oil to commercial, industrial and government customers.
- Forecourt convenience stores: The UAE forecourt convenience store market, in which we participate, is a subsegment of the broader UAE convenience store market and comprises convenience stores built at or adjacent to retail fuel service stations. Euromonitor forecasts that the forecourt subsegment will grow at a CAGR of approximately 8.0% from 2016 to 2021, split roughly evenly between new store growth and same store sales growth.
- Lubricants: Comprising primarily engine oils and greases, lubricants are used by retail customers primarily for motor vehicle engines and by commercial, industrial, marine and government customers for motor vehicles as well as for other engines, machinery and equipment.
- Liquefied Petroleum Gas (LPG) for domestic usage: LPG is the primary cooking fuel in the UAE and is also used for other commercial and industrial applications. IHS Markit estimates that demand will grow at a CAGR of 8.8% ADNOC Distribution from 2017 to 2022.
- Compressed Natural Gas (CNG) fuel for vehicles: Through providing CNG, the company has promoted ‘Natural Gas for Vehicles’ (NGV), an alternative fuel that is safer, cleaner and more economical.