Over the past decades, there were numerous aspects of cooperation and coordination among GCC countries, leading to making a progress in local economies and economic integration among GCC States.

Yet, cooperation in the oil and gas industry seems to be excluded from this cooperation, although the oil sector is the essence of the GCC economies.

It seems that the semi government and private sectors have decided to break this exception and conclude deals in the area of petroleum products — a very important shift that marks a promising start of greater inter-GCC coordination in this vital sector, which will consequently reflect positively on the oil and gas sector.

Recently, the Emirates National Oil Company (Enoc) and Saudi Arabia’s Aldrees Petroleum and Transport Services Company (Aldrees) have signed a joint venture agreement to invest Dh400 million in construction of 40 petrol stations in Saudi Arabia over the next three years.

Enoc has been for years involved in some limited activity in Bahrain.

Under the agreement, Enoc and Aldrees signed a deal in Dubai last August to set up a company with a capital of Dh45 million, shared equally by the two companies. The joint venture company will operate in the field of service stations and retail.

The new company forms a new addition to the auto services market and retail trade in fuel and service stations in Saudi cities, thus taking advantage of Enoc’s vast experience in this field.

Promising start

Despite the modest capital of the new GCC’s joint venture, compared to huge oil investments in GCC countries, estimated at tens of billions of US dollars, the move constitutes a promising start for joint investments in the oil sector and the possibility of opening it to the private sector, which has long sought to invest in the oil industry and contribute to its development.

The UAE-Saudi joint venture will have important results, the first of which is the development of the oil services sector in the GCC country, making the most of high-class services provided by UAE petrol stations that live up to five-star hotels in terms of services and infrastructure, a fact that can be felt by visiting stations not only in cities, but also on its highways.

Meanwhile, petrol and service stations in most GCC countries do not have the same level of services, and some even do not commensurate with the development in infrastructure and the progress that has been made in many areas.

Promote competition

Secondly, the move will help promote competition between petrol stations within each state, which will accordingly prompt them to give the best services. In fact, the UAE was the first country in the Gulf to benefit from this experience and healthy competition between three national oil companies which have sought to provide high quality products at competitive prices, a move that led to provision of high-class services.

The third point is enhancing common market and coordinating investments by the GCC private sector, which eagerly seeks to play a bigger role in the development process through joint investments that may find opportunities in the relatively large Gulf market — not yet available in each individual Gulf market. Hence, these investments will contribute to increasing domestic investments, supporting growth rates and offering more jobs for Gulf citizens.

Seemingly, there is an official response to such an approach supported by the Chambers of Commerce and industry, where GCC’s oil agents agreed to study the possibility of establishing a Gulf energy and gas market, during their regular meeting held recently. This represents a good progress signalising that the GCC’s public and private sectors share identical visions for the future of the GCC’s oil and gas sector.

In parallel, there are many successful experiences in other sectors between one Gulf State and another. Capitalising on each country’s experience, this will help facilitate the flow and movement of investments among GCC countries, which will contribute to sharing these experiences and upgrading the level of services and production facilities.

This will eventually have its positive effects on Gulf economies individually and as a whole.

Dr Mohammad Al Asoomi is a UAE economic expert and specialist in economic and social development in the UAE and the GCC countries.