Geared up for change in Oman’s fuel market

Oman

Tarik Al Junaidi, CEO of Oman Oil Marketing Company (OOMCO), talks to The Energy Year about the company’s activities and business model and its recent work at the Port of Duqm. OOMCO provides retail fuel, aviation and marine fuels for domestic consumption and lubricants for the Omani and export markets.

Can you walk us through OOMCO’s activities and business model?
Oman Oil Marketing Company is one of the major distributors of fuel in Oman. We have a 40% market share throughout the whole country, which we serve via our retail stations. We are also distributors of fuel for aviation, with activities in Muscat, Sohar and occasionally Salalah.
Currently, we have 233 stations in Oman, which cover all the strategic areas of the sultanate. We provide various kinds of services from our stations, such as car care centres, shopping, food and coffee shops, gyms, cash withdrawals, pharmacies and post offices.
OOMCO is taking steps to move away from being a commodity-based company to become a more service-based one. We are developing a new business model, which is part of our five-year strategy. The strategy is to create hubs. Rather than have people simply fill up their cars, we want to provide facilities committed to offering services that go beyond the pump.
We see stations as prime real estate, as they are in strategic locations. Moreover, our dependence on fuel is expected to decrease with the increase of greener means of transportation. When the demand for fuel decreases, the issue will be how we keep attracting people to our stations. The answer is by offering them a diversified services basket. We must think outside the box and be innovative so we can identify what customers will need to be incentivised to spend their money at our stations.
In short, we are trying to diversify our business by extending from being purely a fuel logistics company to providing different services, food in particular.

What have been the key steps taken by the company within the fuel bunkering sector?
Fuel bunkering is a business that is peaking. Last December, we inaugurated our marine bunker fuel terminal, worth USD 28 million, at Port of Duqm (Duqm Bunker Terminal, or DBT). We have recently changed the name DBT in the first quarter of 2023 to OOMCO Marine so as to give a clear understanding to our current and future clients on what we do. We were already providing fuel for vessels in Sohar, and we had also started this activity in the UAE. Our ambition is to continue growing in this segment.
OOMCO Marine’s purpose is to provide different marine fuels locally as well as internationally. We supply the full range of bunker fuel to ships, including low-sulphur marine fuels in line with the IMO’s decarbonisation targets. OOMCO Marine will therefore meet the increasing demand for high-quality, sustainable marine fuels at the port, helping to further position Oman as a world-class logistics and shipping hub and boost economic growth and diversification.
Duqm is very well positioned geographically, and the marine fuels station aims to serve the international shipping market, as it is close to major global shipping routes and will soon be supplied by the OQ8 refinery.

What do you see as the main challenges OOMCO Marine and Duqm face in being perceived as a focal point for shipping operators?
Generally speaking, for any port to succeed, you need to offer different services to entice shipping operators and other customers to stop at your port. For instance, many vessels in the region head to Fujairah because, for example, they offer bunkering, ship chandelling and crew changes, and spare parts can be delivered easily there. OOMCO Marine’s terminal in Duqm is a first major step in increasing the appeal of the Port of Duqm, as having bunkering available creates a big incentive for shippers to use the port.
We are trying to be as competitive as we can with Fujairah in terms of fuel pricing. We are taking advantage, as mentioned, of the refinery and the facilities that will deliver additional services around it (for example, the Ras Markaz storage terminal) and Duqm’s location, which can save ships time and money, as ships can avoid sailing all the way to Fujairah.
A key problem is that shippers are not fully aware of Duqm’s capabilities. We have been talking with a Japanese company that sails from Europe to Japan that is accustomed to stopping in Fujairah to refuel. When we asked why they didn’t stop in Duqm, they said that they didn’t know about the port. We need to work closely with the Port of Duqm to create awareness and to communicate the various services offered at Duqm to potential customers.

How is OOMCO gearing up to face the energy transition?
There are many initiatives in Oman that are contributing to the country’s goal of becoming net zero by 2050, and all the players across the various sectors have to do their part. From our point of view, there will still be cars with combustion engines which require different kinds of fuel, whether that be diesel or gas, and we will provide our customers with the fuel they need. However, slowly we are seeing the effects of the transition. People are becoming excited about electric vehicles: that is the buzzword right now.
We are gearing up since our business dynamic is changing drastically. We started with three electric vehicle charging points placed in our stations, and more are coming. We are investing consistently, as each DC fast charger unit costs about OMR 20,000 [around USD 52,000], depending on how many kilowatt hours the unit produces. Ours produce about 180,000 kWh.
We are placing these charging points in various strategic areas because EV owners must feel comfortable that they can drive all the way from the UAE’s border to Salalah and be assured that Oman Oil Marketing Company will offer them electric fuelling facilities.
Our goal is to continue to expand beyond our petrol stations because EV chargers can be anywhere – from your home, to a shopping mall, to the post office – and we need to adapt to meet customers’ future needs.
Finally, we have about 50,000 square metres of land in Duqm, 50% of which is occupied by OOMCO Marine. We still have 50% of the land remaining to potentially devote to alternative energy. If ammonia marine or other forms of fuel starts to pick up, we can use the facility to expand in this area.

What are the main initiatives taken by OOMCO to be more sustainable?
The installation of solar power modules in our stations is a very important initiative that we are carrying out, and we are trying to convert more of them to run on solar power.
Then we have what we call a vapour recovery system, which we install in our stations to capture the vape from the fuel, condense it back into a liquid form so it may be used again, ensuring it doesn’t escape into the environment.
Finally, in April 2022, we signed a deal with Wakud to sell biodiesel blends in Oman to corporate customers and marine segments. It is an important initiative from our side and highlights our efforts to go green quickly. The Biodiesel is from refined cooking oil, and you can inject 5% of it into regular diesel to reduce carbon emissions by roughly 4.6%. Compared to other solutions – such as EV chargers or hydrogen, which are more expensive and long term – biodiesel is a quick win and an alternative that can be implemented straight away, as you don’t have to modify engines (in particular for trucks, blending diesel with what we call B5). In this area, we have signed a five-year agreement with Oman Aluminium Rolling Company to supply them with B5 biodiesel and are working with other corporations on the same. The main challenge in adopting a solution such as biodiesel on a large scale is that diesel is subsidised here in Oman. Companies recognise and see the value and benefits of B5, but it is more expensive than regular diesel, and often this consideration is more important for them.
Nonetheless, I see the demand for biodiesel growing in the future as long as the government is giving the right incentives. One incentive could be, for instance, tax breaks for customers who use Biodiesel: such an incentive would contribute to reducing carbon emissions. Everyday customers play a fundamental role in kicking off a real green revolution, but to achieve that, you need to incentivise them to actually move forward and change.

What are your plans to grow the company?
In November 2022, we signed an MoU with the Saudi company Tamiyoz to facilitate the expansion of our service stations across Saudi Arabia, and last year we opened a facility in Mecca and launched five additional sites within the greater Jeddah area. Our aim is to operate 26 fuel stations across Saudi Arabia by the end of 2023.
In Tanzania, we already count 12 new stations, and we are still growing. An interesting aspect about Tanzania is that many stations don’t have convenience shops. The business dynamics of these shops are different from what we are used to because people have their own habits with respect to how they purchase items, but we are investigating the market to adapt to what it requires.
In the future we might consequently start having convenience stores in those stations but tailored specifically for that clientele. In the end, this is how I conceive innovation: add value to something that already exists to make it even better.

OOMCO aims to become one of the top-five fuel marketers in the region by 2027. What is your strategy to achieve this target?
Our strategy is mainly to focus on how we can be sustainable for the next 50 years by always exploring innovative ways to develop our business and by providing the best experience for our customers. As mentioned, we are strongly expanding into Saudi Arabia and Tanzania, and we are monitoring the GCC region to see if there are any opportunities.
Ultimately it all comes down to what you can provide that your competition can’t, and that is what we are trying to tweak. We’re looking for the mix of services and products we should be providing. There is still a learning curve, but we always tend to do better via innovation. More concretely, we are looking at doubling our gross margin within the next five years by identifying and engaging in new types of business.

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