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ADNOC Distribution to Acquire 15 Service Stations in Saudi Arabia

ADNOC Distribution announced the execution of a definitive agreement to acquire 15 service stations in Saudi Arabia - WAM
ADNOC Distribution announced the execution of a definitive agreement to acquire 15 service stations in Saudi Arabia - WAM
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ADNOC Distribution to Acquire 15 Service Stations in Saudi Arabia

ADNOC Distribution announced the execution of a definitive agreement to acquire 15 service stations in Saudi Arabia - WAM
ADNOC Distribution announced the execution of a definitive agreement to acquire 15 service stations in Saudi Arabia - WAM

ADNOC Distribution on Thursday announced the execution of a definitive agreement to acquire 15 service stations in Saudi Arabia, reaffirming its commitment to grow its business in the Kingdom; the largest fuel retail market in the GCC.

The purchase consideration for this acquisition is AED36.7 million ($10 million). The acquisition is subject to certain conditions (including obtaining regulatory approvals).

Already the only fuel retailer operating in all seven emirates in the UAE, the addition of these new stations highlights the long term smart growth strategy to also become a leading fuel operator in Saudi Arabia.

The company sees value creation potential coming from uplift in fuel margins and the company’s integrated approach to managing fuel and non-fuel retail offerings, state news agency WAM reported.

Located in the eastern region, with sites dedicated to both highway commuters as well as in-community convenience, the new stations will be refurbished in line with ADNOC Distribution brand standards and offer high quality fuel and retail services to customers, including convenience stores.

Ahmed Al Shamsi, Acting CEO of ADNOC Distribution, said that expanding in Saudi Arabia is "is an important milestone for our company and part of our profitable growth strategy."

"We see this expansion as a natural progression since opening our first station in 2018 and look forward to significantly increasing our presence in the coming years. This is the first announcement of many we intend to make with Saudi being a key strategic market for us as we make ADNOC service stations a destination for all in Saudi."

ADNOC Distribution opened its first service station in Saudi Arabia in December 2018, located on the Riyadh-Dammam highway around 40 kilometres from the capital. It was followed shortly after by the second in the city of Hofuf within Al Ahsa Governate. Upon completion of this transaction, the new locations will bring the company’s total network to 17 across the Kingdom.

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Saudi Arabia's Digital Advertising Boom: Addressing Economic Leakage, Boosting Local Content

A digital advertising event recently held in Riyadh (Asharq Al-Awsat)
A digital advertising event recently held in Riyadh (Asharq Al-Awsat)
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Saudi Arabia's Digital Advertising Boom: Addressing Economic Leakage, Boosting Local Content

A digital advertising event recently held in Riyadh (Asharq Al-Awsat)
A digital advertising event recently held in Riyadh (Asharq Al-Awsat)

Saudi Arabia’s digital advertising sector is experiencing rapid growth, but a significant portion of its revenues is leaking to foreign platforms. To maximize the impact on the national economy, experts are calling for strategies to curb this outflow and redirect it to local channels.

The importance of retaining digital ad revenues lies in the substantial size of this market. It is estimated that approximately $1 billion in ad spent is lost annually to foreign platforms, representing a considerable loss to Saudi Arabia’s economy.

Dr. Ebada Al-Abbad, CEO of Marketing and Communications at Tadafuq, a Saudi digital advertising network, told Asharq Al-Awsat that the problem stems from the fact that although advertisers, products, and audiences are often local, the largest share of financial gains goes to foreign platforms. He estimated that 70-80% of the $1.5 billion spent on digital advertising in Saudi Arabia in 2022 went to global platforms such as Google and Facebook. This results in the national economy losing nearly $1 billion annually from this sector alone.

Al-Abbad noted that government agencies in Saudi Arabia also contribute to the outflow. He explained that public sector spending on digital advertising, intended to raise awareness among citizens and residents, frequently ends up on foreign platforms. Government spending makes up about 20-25% of the total digital ad market in the Kingdom, meaning hundreds of millions of riyals leave the country annually, weakening the local digital economy.

Al-Abbad argues that Saudi Arabia needs strong local digital ad networks to keep this revenue within the national economy. These networks would help create jobs, drive innovation, and promote cultural diversity in digital content. Developing local platforms would also enhance Saudi Arabia’s digital sovereignty by ensuring that data remains within the country and is not controlled by foreign entities.

Moreover, local networks would reduce dependence on international platforms, ensuring that the economic benefits of digital advertising remain in the Kingdom, he said, stressing that this would align with Saudi Arabia’s broader Vision 2030 goals, which emphasize building a robust, diversified economy driven by local industries and digital transformation.

Globally, the digital advertising sector is growing rapidly. In 2022, worldwide spending on digital ads reached $602 billion, and it is projected to hit $876 billion by 2026. In the Middle East and North Africa (MENA) region, the digital ad market grew to $5.9 billion in 2022, with Saudi Arabia’s market accounting for over $1.5 billion.

In other countries, the digital ad sector plays a crucial role in boosting national economies. For example, in the United States, the digital advertising industry contributed $460 billion to the GDP in 2021, about 2.1% of the total. In the UK, the sector accounted for 1.8% of GDP in 2022. This shows how important digital advertising can be in driving economic growth.

One of the key challenges facing Saudi Arabia’s digital ad sector is the dominance of global platforms like Google and Facebook, which control 60% of the global digital ad market, Al-Abbad told Asharq Al-Awsat. This dominance results in a significant outflow of revenue and allows these platforms to control digital data and content. He warned that this could undermine Saudi Arabia’s national sovereignty over its digital economy.

To counter this, he emphasized that Saudi Arabia needs to build competitive local networks that can retain a larger share of the market. This will not only keep more revenue in the country but also strengthen the Kingdom’s control over its digital data and content.