The Emirates National Oil Company, ENOC, has spread from the shores of the UAE to the Far East, Europe, and Africa, and is now actively pursuing a new and challenging period of further growth and diversification. Zaid Al Qufaidi, Managing Director of ENOC Marketing, discusses the exponential growth in the energy sector, particularly in the jet fuel business, and the company’s widening global presence.
Dubai´s winning bid to host the 2020 World Expo has placed the Emirate at the center of the world stage and provides an opportunity to show its transformation from a tiny Gulf oil producer to a global focal point in terms of sustainability, mobility, and innovation. What is your perspective on this transformation and what are ENOC’s activities in support of this event?
This transition didn’t happen by accident. The Government of the UAE and the Government of Dubai have been planning the sustainable growth of the country for a very long time.
ENOC is one of the pillars of this growth plan and we strive to meet the growing energy needs of Dubai and the UAE. We knew from the beginning that we were very much aligning ourselves with the government’s strategy.
To this purpose we’re continuously reviewing the government’s development strategies and projects and looking at opportunities to support them.
Regarding Dubai winning the bid for Expo 2020, this set us on a completely different platform. With over 25 million visitors expected in the UAE, Expo 2020 provides an unprecedented opportunity to boost the country’s economy, and the government is committing mega investments to support its success. Dubai World Central (DWC) is one of those investments.
ENOC currently provides 40% of jet fuel to Emirates Airlines and 80% to Fly Dubai, and is currently studying solutions to build a pipeline to supply jet fuel to DWC.
We are also expanding our refinery in order to be able to provide additional fuel, and we’re building more gas stations to strengthen our retail network and service offerings.
Therefore, all our projects are focused on providing world-class energy solutions that incorporate the government’s growth and expansion plans.
In contrast to many oil-rich countries and despite the oil price collapse in 2014, the UAE’s GDP expanded by 4.8%. How did the UAE manage to avoid the so-called “resource curse” and utilize natural resources for long-term socio-economic development?
I’ve been in the business for 26 years and I’ve seen oil prices going up and down. I’ve seen the price of a barrel reaching a price as low as $10 and then as high as $160.
The government is aware of these fluctuations and that’s why it emphasized the importance of sustainable development and economic diversification.
This is one of the major strategic decisions that the Government of the UAE has taken and Dubai is a clear example of this diversification. Dubai has taken a long-term decision to direct its focus towards trade and tourism.
In the tourism sector, although having an airline is an important facility in order to bring visitors to the UAE, it’s not enough. It’s necessary to build the appropriate infrastructure for it, such as roads, hotels, shopping malls, and to integrate them all.
Moreover, the UAE’s strategic location boasts an incredible global accessibility by connecting three continents and two-thirds of the world’s population within eight hours of flight.
This is one of the reasons why the UAE and Dubai won the bid for Expo 2020.
What does the exponential growth of the aviation sector mean for ENOC? Has ENOC been able to identify new high-growth business opportunities from the development of the aviation sector?
Let me tell you our experience in the jet fuel supply field in order to understand how fast the aviation sector has grown in the UAE. Dubai International Airport (DXB) is considered the number one airport in terms of fuel consumption in the world.
How big is this volume? A 30,000-ton ship is consumed at Dubai International Airport within two days. Therefore, we’ve invested in building a refinery and five years later we’re doubling its capacity.
We have also built two pipelines feeding Dubai International Airport directly. Yet, this wasn’t enough; so we’re planning to build the third pipeline by the end of this year. That’s how fast the growth in aviation industry is.
Drawing on ENOC’s experience in the region and beyond, what could be the role of Dubai for American and global investors interested in penetrating MENASA?
I think the globe has become a small village. Traditionally, New York and London are the hubs in the West while Singapore is Southeast Asia’s hub.
I believe it has been proven that the hub for the Middle East is Dubai, especially after having won Expo 2020.
There are three factors that explain the UAE’s success as an international hub. First, the multicultural structure of its community.
People in the UAE have accepted living among other nationalities, ethnic groups and religions from a long time now.
Secondly, there’s safety and security, which is a key feature of the UAE and a crucial factor in order to attract foreign investors.
Thirdly, there’s world-class infrastructure, which involves easy access to telecommunication, transportation, etc. Moreover, the UAE is very well connected to other places in the world like Africa and Asia.
This is why the UAE and Dubai in particular attracted investment and talent from everywhere.
ENOC is already present in more than 50 markets. Could you please share more details about the new ENOC Lubricants & Grease Manufacturing Plant (Elomp) facility in Jebel Ali Free Zone, and what does it represent in terms of ENOC’s regional growth?
ENOC has adopted a model in the UAE that has been very successful as we were able to grow over the past 20 years to become one of the most recognized energy providers in the region.
We opened our first foreign trade office in Singapore in 1999, so it’s natural for us to grow abroad. Then we set up our offices in London because of the timing, and this way we managed to cover global trade routes.
Afterwards, the company’s expansion focused on physical investments in our main regions of operations with oil terminals in Singapore, the UAE, Saudi Arabia, Djibouti, and Morocco.
In addition to this, we built one of the biggest oil lubricant and grease manufacturing plants in Fujairah, which is not also the most modern of its kind in the region but also the biggest one with an annual capacity of 250,000 tons.
Currently we are distributing to over 55 countries from Australia to West Africa, and we expect to raise this number to 60 countries within this year. So our brand has become well recognized and accepted.
Furthermore, we have recently acquired another plant in Jebel Ali, namely the Lubricants & Grease Manufacturing Plant (Elomp). Featuring the most advanced technologies, including automated blending and metering systems, Elomp can maximize blending flexibility in respect of product volumes and types.
Ahmad Al Muhairbi said the key word of Wetex 2015 was “partnership.” ENOC Marketing is growing rapidly in international markets; how important are joint ventures in this expansion process?
ENOC strongly believes in partnership, and the one we have with Chevron is a great example. We’ve been partners with this world-class organization since the ‘80s and our partnership includes the aviation sector, storage terminals, and lubricants manufacturing and distribution.
For us partnership means knowledge transfer that allows us to become local operators with international experience.
In order to support the transition towards a knowledge-based society, Expo 2020’s central theme is “Connecting minds, creating the future”. Given the capital-intensive nature of the operations in the sector, would you say that the shortage of high-skilled human capital is one of the main challenges ahead for the future competitiveness of the sector?
There has certainly been a transformation in the education system in the UAE and I have witnessed it in the last 10 to 12 years. We are now seeing a lot of international education providers have moved and set up operations here.
As we strive to become a knowledge-based economy, academia and business are working closely in terms of bolstering innovation and supporting the requirements of the job market.
I don’t think there’ll be a shortage in terms of skills; on the contrary, I think we are already shaping a system that is incubating a skilled workforce.
One of the key themes of discussion at G20 this year is to buttress sustainability in the global economy. Especially in the U.S., as we’ve seen with BP’s settlement for $18 billion, oil and gas related activities are increasingly under the media spotlight. What is ENOC’s track record in terms of HSE and environmental standards?
During the almost 30 years that we’ve been operating, we’ve held a very honorable record in terms of HSE. At ENOC there’s a clear commitment towards the environment and we regularly invest in green technologies and products.
For instance, last year the UAE issued a mandate for diesel to contain lower sulphur, from 500ppm to 10ppm, which is equivalent to European standards.
The gasoline we have been selling since 1996 is now unleaded gasoline and is in line with international standards.
Considering that you’ve been a witness of this country’s transformation, could you share an anecdote that exemplifies the magnitude of the change in Dubai?
I’ve seen phenomenal growth in terms of oil consumption; a double-digit growth that has been unique in the world. The government is now aware of the importance of this growth and is trying to channel its benefits to infrastructure.
I remember once when I was in a meeting with one of our rulers where he requested a growth forecast. I said, “Your Highness, this is how it is going to look like in 20 years,” and he replied, “I do not want to know how it is going to look like in 20 or 30 years; I can tell you what’s going to be like in 20 years; I want to know what is going to happen in 100 or 150 years.” This is how visionary our leadership is.