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ENOC plans refinery, terminal, retail business expansion

ENOC plans refinery, terminal, retail business expansion

Jan 03, 2017
9 min read
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In an exclusive interview with Pipeline Magazine’s Nadia Saleem, Saif Al Falasi, CEO, ENOC Group speaks about ENOC’s plans for expanding retail, refinery and jet fuel business to support expected demand hike from Dubai Expo 2020

 Could you provide an overview of ENOC’s strategy?

As a wholly-owned entity of the Dubai Government, our strategy focuses on going beyond the expectations of an energy partner by innovating and creating sustainable value for all our stakeholders. Earlier this year, we updated our strategy to reflect three major components; the deregulation of gasoline and diesel, the full acquisition of Dragon Oil in 2015 and the release of Dubai Plan 2021. On a long-term basis, our plans for the 50 per cent capacity expansion for our 140,000 bpd Jebel Ali refinery are progressing. The project reflects ENOC’s commitment to continue its role as a major supplier of jet fuel to Dubai Airports. This marks a significant achievement for ENOC as it continues to support the growth of Dubai International Airport, the world’s busiest airport. A strategic project that was delivered this year is the expansion of our subsidiary, Vopak Horizon Fujairah Limited. The new expansion added 478,000 cubic meters (cbm) of crude oil storage capacity to increase the facility’s total capacity to 2.6 million cbm. This makes the Vopak Horizon facility, along with the Port of Fujairah, a very strategic facility as it sits on a trade route just 70 nautical miles from the Straits of Hormuz. A key step in the next phase of our growth is helping the UAE get ready for the EXPO 2020, as up to 25 million additional international visitors are expected to attend the event. EXPO 2020 is a welcomed opportunity for ENOC to support Dubai’s Plan 2021. Part of that support will be realised through the roll-out of retail stations network, which will deliver an array of offerings, including non-fuel and other supplementary services. Sustainability remains an integral part of our growth plans and supporting Dubai’s vision for a smart and sustainable city by 2021 is a priority. In 2008, we adopted a pragmatic Energy & Resource Management (ERM) Policy and manual, ahead of the launch of ISO 50001, and the financial impact to-date has been truly encouraging. Since launching the savings component of our ERM programme in 2012, we have been able to save a total of AED 26 million ($7.08 million) – a significant leap ahead of our actual target of AED 13 million (exchange rate $1=3.67 AED). This accomplishment is a testament of our commitment to remaining a responsible corporate citizen while we continue to expand our geographic footprint. ENOC is deeply committed to meet the UAE’s rising energy needs to continually enhance the social infrastructure and human capital development. Supporting the growth of our workforce and bolstering the company’s 35 per cent Emiratisation rate to 50 per cent by 2021 is one of our key priorities.

 What are the key projects for ENOC?

At ENOC, we aim to be a leader in the local market and gradually expand our operations across international markets. We have a clear strategy and roadmap for next five years, which we continuously monitor and adjust in line with changing business environment. The current focus is to enhance customer experience in line with EXPO 2020 and Dubai 2021 plan in the local market. Currently, we are looking at the expansion of our retail network to add 54 more stations by 2020. At the same time, we intend to expand into new markets with complete offerings of products and services across the energy value chain. Additionally, we will commence construction of Project Falcon’s phase 2, which is a 19km jet fuel pipeline connecting our refineries in Jebel Ali, to Al Maktoum International Airport in Dubai South. Phase 1 connected Jebel Ali to Dubai International Airport, and has been supplying aircraft with increased capacity of fuel since 2015. The Dragon Oil acquisition transformed the company into a fully integrated oil and gas business. These achievements are aligned with the Group’s strategic direction to meet the energy needs of the UAE, expand its operations and invest in the infrastructure required to facilitate Dubai’s growth.

 What are your plans for Horizon and petrochemical bunkering in general?

We are considering opportunities to expand the subsidiary Horizon Terminals into Central Europe, the Far East and South Asia, while strengthening our existing operations in Djibouti, Morocco and Singapore.

 How are you responding to the changing market dynamics?

Energy demand is continually rising and evolving. ENOC’s strong integrated business model will enable it to withstand the challenges associated with the ongoing oil price volatility. Despite the difficult macroeconomic situation, ENOC revenues increased by 45 per cent over the last 5 years, reflecting strong operational and sales performance, and increased efficiencies in supply chain management in domestic and overseas markets such as North Africa and the Far East. In 2015, the volume of sales of crude oil and petroleum products reached a historic high surpassing 220 million barrels, reflecting an increase of 16 per cent over the previous year. Our strategy is focused on diversifying our revenue streams by investing in operations that are well positioned to generate sustainable growth. We intend to achieve this by strategically positioning ourselves and our portfolio and by attracting and retaining the right talent. We are committed to progressing our investments in key projects strategically designed to enable the outstanding growth of Dubai’s aviation industry and enhance the Emirate’s energy security. With regards to our expanding portfolio, a few examples of how we are tackling these challenges are as follows: We expanded our products portfolio to include ultra-low Sulphur diesel, a fuel source that emits fewer CFCs and is therefore comparatively better for the environment. We launched the Vehicle Identification Pass (ViP) service, a cashless and card-less service, to our retail customers at ENOC/ EPPCO service stations across the UAE. We implemented Project Falcon, a jet fuel pipeline directly from our refineries in Jebel Ali, to Dubai International Airport, in order to provide the airport and airlines with consistent fuel sources. We will also soon build a pipeline to the new airport in Jebel Ali and upon the completion of the extension to Al Maktoum International Airport. We also expanded our Jebel Ali refinery, whose capacity we hope to increase by 50 per cent by 2019, due to rising local demand for our products. This refinery will produce Euro 5 products, with comparatively lesser emissions are therefore better for the environment.

 What is the impact on ENOC’s operations and performance since the oil price deregulation?

The oil price deregulation has enabled up the freeing of resources for us to look at the expansion of our retail segment. We are able to consider products and services that are also in line with the environmental objectives of the Dubai Plan 2021 in ensuring a sustainable city. With Dubai’s green initiatives to substitute gasoline and diesel in the long run we can now consult with the Dubai Government to include CNG and biofuel, which will help us in responding to the continuously increasing demand.

 How is ENOC supporting Dubai’s plans for Expo Dubai 2020?

We have an aggressive growth plan to expand the network in Dubai to reduce congestion and meet the demands in line with projections for EXPO 2020 and beyond. In Nov. we announced the opening of a new station in Academic City as the first step in attaining our plans to grow our service station network by 40 per cent until 2020. These plans include the construction of 54 more in Dubai and the ongoing renovation of major service stations, such as the stations in Dubai Internet City and Oud Metha. During 2015 we marked a key milestone in ENOC’s history with the completion of key projects strategically designed to enable the outstanding growth of Dubai’s aviation industry and enhance the Emirate’s energy security. Project Falcon, a 58km jet fuel pipeline from Jebel Ali to Dubai International Airport, will contribute 55 percent of the ultimate fuel demand of Dubai International Airport. Energy and resource management is another key area as we approach Expo 2020 to ensure rationalisation of consumption and sustainability of resources. ENOC’s approach is aligned with the goals of the Dubai Integrated Energy Strategy to reduce energy demand by 30 per cent by 2030 and to diversify the Emirate’s energy mix.

 

-ENOC is a 9,000 employee organisation that operates across the world, earning $15 billion in 2015

-In 2015, ENOC’s sales reached a historic high of more 220 million barrels, reflecting an increase of 14 per cent over the previous year

-In 2015, the company achieved savings of $4.6 million compared to a targeted saving of $2.1 million

-ENOC’s current Emiratisation rate is 34 per cent, with a target of 50 per cent by 2020

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