Gull plans to open an unmanned site on State Highway 1 at Maheno, where it has leased the existing independently owned service station.
The expansion into the South Island comes after operating in the North Island for 20 years where it has been credited with setting the standard for fuel price competition.
In addition to Maheno, five other unmanned South Island sites had been identified for development.
Waitaki Mayor Gary Kircher welcomed the news and said increased competition was positive for motorists.
"When you look at the difference in prices between what you have to pay in the South Island compared to a lot of places in the North Island ... it's quite a serious difference.
According to website pricewatch.co.nz, and through prices via Cardlink fuel cards, the average cost of a litre of 91 at a Gull station in Manawatu/Whanganui on Sunday was $2.057.
At BP it was $2.081, Z Energy $2.096 and Mobil $2.083.
The average figures for Otago were BP $2.268, Z $2.276 and Mobil $2.265.
Gull general manager Dave Bodger said motorists had been asking it to bring the ``Gull Effect'' to the South Island for many years.
"The 'Gull Effect' may not reach far beyond Maheno initially but we know that many people travel through Maheno and our build programme that follows will greatly extend Gull's reach in the South Island.
"We have development sites in greater Canterbury, in Christchurch and are very optimistic for opportunities for Gull across the South Island.''
Extra tanks will be added at Maheno to boost capacity.
Maheno resident Maree Walker, who commuted to Oamaru, said the price of fuel concerned her and she was pleased she would be able to fill up for less in her home town.
Gull will draw the fuel for its South Island sites from other terminals already in the area.
It has 88 service stations in the North Island and two others under construction.
About 40 of its sites are unmanned.
It has identified another 20 potential sites.
The retailer has been opening between five and 10 locations each year over the past 10 years. - additional reporting NZME
