Fuel retailer Gull is gearing up to expand into the South Island, spending around $5 million to set up five unmanned service stations.

Gull will open its first South Island site in Maheno on State Highway 1 in July, along with others located in Christchurch and greater Canterbury in following months.

After the company opens its initial five sites, it plans to open more, at the rate of three to four additional ones each year. The development and to set up each unmanned site costs around $1m, and a typical retail site costs in the vicinity of $2m.

The expansion into the South Island comes after operating in New Zealand for 20 years, with Gull often credited among industry commentators for setting the standard for price competition among other operators.

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Dave Bodger, general manager of Gull, told the Herald the retailer's expansion into the South Island would make a difference to the cost of fuel in the area.

Gull would be able to keep its overheads down and sites smaller by opening unmanned stations, this will be the model for most of its sites in the South Island.

"With the focus on unmanned we can have a small area of land that keeps our overheads down and enables us to pass savings through to motorists," he said.

Bodger said the company would be looking all over for other locations to put in stations.

"All of our team have been working really hard to bring this together, it's very exciting."

Gull will draw the fuel for its South Island sites from other terminals already in the area, it will not build its own terminal.

Gull has 88 service stations spread throughout the North Island and two others under construction. Around 40 of the 88 sites are unmanned. It has another 20 sites on its radar.

The retailer has been opening between five and 10 new locations each year over the past 10 years.

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AA principal adviser of regulation and PetrolWatch spokesman Mark Stockdale said Gull's expansion into the South Island was good news for motorists who could expect more price competition.

"In the past South Island motorists have missed out on the lower fuel that North Island motorists have been experiencing for some time as a result of fuel companies like Gull who have a lower-cost business model which enables them to charge lower fuel prices," Stockdale said.

Gull plans to open three or four service stations each year in the South Island. Photo / Duncan Brown
Gull plans to open three or four service stations each year in the South Island. Photo / Duncan Brown

In recent years there has been an increase in price competition in the South Island, through other low-cost operators such as Nelson Petroleum Distribution (NPD) and McKeown expanding their networks across the South Island.

North Island low-cost fuel brand Waitomo will also expand into the South Island.

"The South Island should end up with the same level of price competition that we've seen across much of the North Island."

Stockdale said Gull had likely not expanded into the South Island sooner due to challenges importing fuel into the South Island.

A fuel terminal is being built in Timaru, not owned by any of the major fuel companies, which will bring even more competition to the South Island, he said.

"It will shake up the wholesale supply of fuel, not just retail."

Gull operates its own fuel terminal in Mount Maunganui.