David Kalife, CEO of Oman Oil Marketing Company talks about growth prospects in Oman’s oil and gas sector and his company’s plans to tap the potential
What is your future outlook for Oman’s oil and gas sector?
We expect to see higher oil prices and an increase in the oil and gas production in Oman. The IMF economic outlook report forecasts that an oil price hike will improve the current accounts of the GCC countries in 2019, pointing out that each GCC country will likely use different financial tools to enhance its resources.
A key player in the Sultanate’s fuel supply chain, Oman Oil Marketing is building a brand that goes ‘beyond the pump.’ This involves increasing the distribution of lubricants and broadening our network of service stations across the Sultanate. We want to create an unparalleled chain of service hubs that provide access to integrated offerings including shopping, food products and services. Our vision is to become the most customer-centric marketer in the GCC and transform the fuel supply industry into a convenient and delightful experience.
Are you positive about the Sultanate’s overall economic growth in 2019?
We are positive about the country’s growth next year. According to the International Monetary Fund (IMF), Oman should become the fastest growing economy in the region with real GDP expected to grow by more than 5 per cent.
As a company, we will continue playing a key role in Oman’s upward trajectory. Continuously implementing a forward-thinking strategy, we are exploring new investments including joint ventures; we are growing our non-fuel revenues (shop, food and services) and our company has just entered the Kingdom of Saudi Arabia with the opening its first service station. Our goal is to rank among the top five fuel marketers in GCC by 2025. We are also increasing our investment in human capital.
In addition, inspired by the government’s directives and in line with the economic expansion and diversification programme (Tanfeedh), we have identified two ‘focus’ sectors for Oman Oil Marketing: tourism and logistics.
In the logistics sector, our company has been developing its bunker fuel business for several years. With a strategic plan to ensure a long-term cost-effective supply of bunker fuels in ports across Oman, we are focused on building physical storage facilities, including a bunker fuel terminal to be constructed at the Port of Duqm, the country’s maritime logistics hub.
In the tourism sector, Oman Oil Marketing has centered its efforts on aviation fuel supply. Currently dominating the market with 40 per cent market share, the company was able to successfully renew its contract with Oman Air for another two years and is a strong contender to add SalamAir fuel supply to its portfolio.
What are the challenges for the oil and gas industry in the year ahead? What are your recommendations/ suggestions to address these challenges?
For resource rich-economies such as ours, the high reliance on hydrocarbon revenues, together with the risk of fluctuations in prices, creates various pitfalls, which is our greatest challenge. Preempting this challenge, we are building on our continuous success by exploring new investments, joint ventures, and growing non-fuel revenues. We view diversification as an important strategy in line with our objective of achieving an income base that is separate from and non-reliant on Oman’s direct oil revenues. Currently, our investment portfolio includes: service stations, bunker fuel facilities and lubricants to name but a few.
Our goal is to become the most customer-centric marketer in the GCC while sustainably developing the company’s presence both locally and internationally. We are expanding our service stations outside the Sultanate into the Kingdom of Saudi Arabia and beyond. We have also set plans to implement a unique business model that will help build our reputation as the preferred one-stop shop. In addition, our roadmap includes expanding our line of lubricants within the Kingdom and the region; this is just the beginning.
What about your expansion plans
We are expanding our footprint, diversifying our revenue streams while exceeding customer needs to always give them what they want and continuously bring innovations.
Our 2025 roadmap includes an objective to acquire 40 per cent of the Oman market, as well as increasing distribution of lubricants and broadening our network of service stations across the Sultanate. In order to unlock Oman’s oil and gas potential, we are joining forces with CC Energy Development and the National Drilling Company in term of commercial fuel sales.
We are also pushing ahead with our ambitious plans to set up service stations outside the country as well as expand our lubricants sales in new countries such as Kenya, Qatar and Bahrain while targeting sustainability. In addition, two new mega stations with a host of facilities including money exchange outlets, gyms, restaurants, post offices, a laundry, play areas for children and shopping centers for families are set to open in Oman in 2019.
How was the year 2018 for the oil and gas sector in general and for Oman Oil Marketing Company in particular?
The industry is recovering from the fall in oil prices that transformed the global industry but the downturn has been a catalyst for continued evolution especially for Oman Oil Marketing.
We led the sector in terms of volume growth as the first three quarters of 2018 were very positive considering our growth of 25 per cent compared to the same period in 2017. Our total sales value was reported at RO468mn with an increase of RO92.5mn against the sales of RO376mn as of September 2017. This growth was supported by the increase in fuel prices, the opening of the biggest number of service stations in Oman as well as implementing some of the most creative marketing and digital campaigns.
In 2018, we inaugurated 15 service stations and opened our 200th service stations on Muscat Expressway. We also refreshed the look of several service stations for the benefit of all customers. In addition, we have introduced Ultimax, the only 98 octane fuel in the country. This performance fuel is already sold in 17 service stations in Muscat, Salalah, Suhar and Shinas.
Café Amazon and other international brands were also added to our portfolio and we installed the Sultanate’s first two-sided fuel dispensers at selected stations. Our service stations have also adopted ‘e-fill’ and payment app ‘thawani’ to meet the growing demand for digital payments. New solutions for commercial customers such as mobile containers are now also on offer by Oman Oil Marketing.