ENOC recently signed an MoU with Emirates Environmental Group (EEG) to promote local environmental education. In what ways is ENOC implementing environmentally friendly sustainability practices in its operations?
True sustainability can only be achieved if we transform the way that businesses think and operate. ENOC is evolving in a way that aligns with this philosophy. We are keen participants in the UAE's environmental protection imperatives, working closely with the UAE Supreme Energy Council and Dubai Carbon on strategic initiatives of demand-side management, carbon footprint reduction measures, and contributing to energy diversification. Our approach is aligned with the goals of the Dubai Integrated Energy Strategy (DIES), which are to reduce energy demand by 30% by 2030 and to diversify the Emirate's energy mix. In 2008, we adopted a scientific Energy & Resource Management (E&RM) Policy and manual ahead of the launch of ISO 50001. We have also rolled out ambitious initiatives to reduce the company's carbon footprint. We opened the Middle East's first green service station and are working heavily on promoting the use of cleaner, greener fuels such as compressed natural gas (CNG) and biofuels as alternative automotive fuels. All of our service stations in the ENOC/EPPCO network are now providing ultra-low-sulfur diesel. This is in alignment with the UAE Federal Cabinet decree aimed at improving the UAE's standards of diesel fuel from 500ppm to 10ppm, whereby all commercial diesel vehicles and equipment motorists are to use the ultra-low-sulfur diesel that matches Euro 5 standards. There is a perception that green equals expensive, but from our experience, this thinking is far from reality. The financial impact of ENOC's quick win efforts towards sustainability has been encouraging. An investment of AED600,000 has yielded savings of almost three times that amount. In terms of business plans, the expected annual saving is $6.9 million, with a payback period of just two years. Being green makes business sense, and we hope that organizations here and abroad realize this.
How would you assess the current infrastructure in Dubai? Do you think new developments are needed in order to meet the increasing demand?
In order to prepare for Expo2020, the government of Dubai is spending AED31 billion for various infrastructure projects related to real estate, transport, hospitality, and aviation. Therefore, the Emirate is an incredibly dynamic market on an upward trajectory of growth and development in the medium term. Regardless of the sector, businesses around Dubai must plan for this surge in activity. ENOC is investing across the board to ensure we deliver on our mandate to supply energy to Dubai and the UAE especially during such a high-demand period. We are creating human development programs for Emiratis, expanding our retail service station portfolio, and expanding our refinery in Jebel Ali.
The aviation industry in the UAE is growing at an exponential rate. What opportunities does this offer to ENOC?
We provide the jet fuel that powers the aircraft that fly to and from Dubai. The expansion of the airport facilities led us to launch Project Falcon, a unique opportunity that will fulfill more than half of the total jet fuel demand of Dubai airports. Project Falcon is a 58-km pipeline from our storage facilities in Jebel Ali directly to both airports, ensuring a safe, reliable, and consistent source of jet fuel for airplanes. Phase 1, linking Jebel Ali and Dubai International Airport, has been operational since November 2015. The extension, which will link Jebel Ali and Al Maktoum International Airport, is currently being constructed and is expected to be complete by the third quarter of 2018.
ENOC also recently acquired Dragon Oil, and you operate across MENA, Asia, and Europe through more than 30 active subsidiaries and joint ventures. What is the impact of these projects?
The acquisition of Dragon Oil was a distinctive milestone in the ENOC's growth story, making us a vertically integrated oil and gas player that is well positioned to strengthen our nation's energy security. This investment not only adds an upstream arm to ENOC, but also has significant potential for the emirate of Dubai as a whole. This combination allows ENOC to partner, compete, and grow with leading international oil and gas companies and regional national oil companies. This acquisition is underpinned by the significant exploration potential that Dragon Oil brings to the ENOC Group, fortifying our footprint across MENA and East Asia. Becoming an integrated oil and gas player will certainly strengthen our financial performance, as we will benefit from both the upstream sector when oil prices are up, and the downstream sector when prices are lower.
What goals have you achieved since being appointed as Group CEO of ENOC?
In August 2015, the UAE Ministry of Energy's decision to deregulate fuel prices was a transformational change for the region, particularly for national oil companies like ENOC. Our sector is capital-intensive; we need to continually invest in new projects to sustain growth, meet customer expectations, and maintain a leading position across all operating markets. By deregulating fuel prices, we have more capital at hand to focus further on local and regional retail expansion plans. We have also taken advantage of market conditions and our strong reputation to grow our international footprint by expanding our operations in MENA and Asia, which is reflected in our numbers. Despite the difficult macroeconomic situation, ENOC revenues increased by 45% over the last five years, reflecting strong operational and sales performance, and increased efficiencies in supply chain management in domestic and overseas markets. In 2015, the volume of sales of crude oil and petroleum products reached a historic high, surpassing 220 million barrels, marking a 16% increase over the previous year.
What are ENOC's prospects for the year ahead?
Our view is that 2016 will be the year that ENOC looks onwards and upwards. Looking ahead, we intend to build upon our success by expanding our regional and international footprint. Due to low oil prices, we are considering acquisitions in various markets across the energy value chain and we will also further develop the markets where we have successful operations. The focus will be to continue diversifying our revenue streams by investing in operations that are well positioned to generate profitable sustainable growth. We intend to achieve this by strategically positioning ourselves and our portfolio, and by attracting and retaining the right talent. Our expectations for 2016 are positive. From our VIP retail solution, which gives customers a cashless experience in service stations, to smart CNG cylinders that enable consumers to track the level of cooking gas, we will continue to invest in innovation and new technology to support the energy sector in the UAE. We are looking to use technology to improve every aspect of our product portfolio. Expansion, be it organic or otherwise, plays a key role in our strategy. We are looking to grow and improve our retail network to include the renovation of existing service stations, the launch of 54 additional facilities in Dubai by 2020, and the construction of 11 additional service stations in Saudi Arabia during 2016. We are also planning a significant expansion of the Jebel Ali condensate refinery to accommodate rising domestic fuel demand and increasingly stringent product specifications.