Oil and gas companies need to innovate to stay competitive, says David Kalife, CEO of Oman Oil Marketing Company. Excerpts from an interview
How is Oman’s economy going to shape up in 2020? And what is your industry outlook?
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 6.2 per cent, a significant increase on its previous estimation of 2.7per cent. We are anticipating a rise in oil prices as well as 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 2020, pointing out that each GCC country will likely use different financial tools to enhance its resources. Production and demand for fuel is growing and oil and gas companies need to innovate to stay competitive and keep the fuel flowing.
For resource rich-economies such as ours, the high reliance on hydrocarbon revenues, together with the risk of fluctuations in prices, create various pitfalls, which is our greatest challenge. Preempting this challenge, our company is 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. We believe in bringing “more & better” to customers instead of the classic “more or better”.
Digital transformation has affected all areas of the economy: it is known as digital disruption. According to Accenture, the digital economy now represents 22.5 per cent of global gross domestic product (GDP). Companies that meet consumers’ digital needs will gain a competitive advantage over others. Diversification of products and services is key and fuel retailers need to pursue non-fuel revenue streams. OOMCO has been developing a solid expertise in that field while transforming itself and the fuel market in Oman.
How was the year 2019 for Oman Oil Marketing Company and the fuel industry in general?
This year we celebrated 15 successful years of sustainably transforming the fuel industry, as per our vision, while driving Oman’s economy forward and achieving over 40 per cent market share in the fuel market. This year, we also introduced our first in-country-value (ICV) report to showcase our accomplishments and we study how we can do more year-after-year. Working towards our ICV commitments and delivering sustained value to the Sultanate. In 2019, OOMCO continued to introduce innovative products and services across all aspects of the business, both locally and internationally.
We now operate 224 service stations across Oman: these have been enhanced by the launch of several new, global restaurant chains including Café Amazon, Debonairs Pizza and Steers. Also, we partnered with the Ministry of Transport & Communications (MoTC) earlier in the year to build five temporary mobile service stations in Al Rustaq on the Al Batinah Expressway: offering fuel, food, and shopping services. The 1,000 sqm stations also include prayer rooms and food / beverage facilities. Our service stations are transforming in integrated service hubs: we create a delightful experience for our customers through convenient and quality products and value-added services. Drivers and their family alike visit our service stations as a destination, no longer to fuel their vehicles only.
Strengthening our commitment to sustainability, we currently have seven solar-powered service stations, six of which are connected to the MEDC grid; we have also introduced another Electric Vehicle (EV) charger after offering the first EV charger on a service station in Oman in 2018. On our global expansion journey, we have opened three more service stations in Dammam, taking our presence in Saudi Arabia to 4 sites. We also made headway on our foray into Tanzania with our new office in Dar Es Salaam and opening our first fuel station before the end of 2019.
As for the sector as a whole, 2019 has been a year of unprecedented change: although the Sultanate is diversifying away from the hydro-carbon sector, demand remains strong but environmental and sustainability trends have altered this fuel demand. In addition, digitalisation continues to have a transformational impact on the sector, as it is on all sectors. Oman Oil Marketing Company is utilising these challenges as a catalyst to grow and evolve, and our dogged commitment to expanding our global footprint and promoting our brand in Oman and throughout the world, has set us in good stead for the next phase of growth.
Can you please update us on the status of OOMCO’s in-port bunker terminal at the Port of Duqm?
The company’s Duqm Bunker Terminal Project is on track for completion in 2021. The 30,000 m3 bunker terminal, which will supply marine fuels of required grades to ships in and around the port, will enhance the services available to attract ships to Duqm and thus contribute to the port’s growth.
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.
Can you talk about the future plans and major areas of innovation for your company in 2020?
We’re geared up for another exciting year and in 2020 we will be pushing forward with our global footprint agenda, diversifying our revenue streams while exceeding our customers’ needs with continuous innovation. We strive on anticipating trends and customer wants as shown with our MEGA service station concept. Our 2025 road map includes several objectives in remaining an industry leader in Oman, and being in the top five fuel marketers by market share in GCC as well as increasing distribution of lubricants and extending our network of service stations beyond the Sultanate.
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. Our first MEGA service station in Oman it’s fuel services at Sultan Qaboos University (SQU) last November: a fully integrated service hub right on campus, providing access to shops, food products and other innovative and quality services unfound till date on the same site in Oman. 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 during 2020.
In line with the Sultanate’s drive to support clean energy, we will also be rolling out the first green service station in the Sultanate. The innovative facility in Rusayl (northeastern Oman) will comprise of a range of unique eco-friendly features including solar panels, LED lights, a Vapor Recovery System (VRS) and an electric vehicle (EV) charger. The station is set to open on January 8th, 2020: this is the latest in a long list of environmental preservation practices adopted by OOMCO.
More broadly, we will be exploring new investments, joint ventures, while continuing to invest in human capital in order to be part of the top 5 fuel marketers in the GCC by 2025. We will continue to build long-term and fruitful partnerships with local companies, SMEs and international companies, as well as deliver cutting-edge technology and incorporate the use of innovative technology in all services provided. Above all, we will continue to build on our commitment to add value to our customers’ lives in a convenient and delightful manner, with more and better services and products. We are always finding innovative ways to energize our customers’ journey and provide them with the quality products and services.