Expanding oil services companies reach out to GCC partners

Petrofac is seeking an edge on rivals through local investment. (Supplied)
Updated 07 September 2018
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Expanding oil services companies reach out to GCC partners

  • Petrofac has made it clear that having a social license to operate — shorthand for supporting local economies — was a critical factor that determined whether it won tenders or not
  • Petrofac CEO Ayman Asfari: The delivery of in-country value, or ICV, is becoming increasingly important. The established national oil companies are prioritizing ICV

LONDON: Oil services and equipment companies are courting GCC partners to bolster local job creation and investment as they seek an edge on competitors to secure new business in the region.
The oil price recovery means there are more opportunities in the oil and gas sector after years of stagnation, although the KSA market has been relatively strong.
Petrofac, the oil services company with a growing reach in the Middle East, has made it clear that having a social license to operate — shorthand for supporting local economies — was a critical factor that determined whether it won tenders or not.
Petrofac CEO Ayman Asfari told Arab News: “The delivery of in-country value, or ICV, is becoming increasingly important. The established national oil companies are prioritizing ICV. In Abu Dhabi, for example, the tendering process now fully embeds ICV. It means that companies with the highest ICV have almost the right of first refusal on business.”
Active training and a development program of local talent are needed, he said.

 

ICV was a key focus area in Saudi Arabia. “More than 20 percent of our employees on the Fadhili project are Saudi nationals and our total local content across all our Saudi projects, including procurement, is expected to peak at more than 50 percent later this year,” said Asfari.
“On the question of the ICV, the in-country value, it’s really a license to operate now. It’s a requirement by clients increasingly. And unless you can meet that requirement, you will not be able to do business,” he added.
Elsewhere, London-listed Lamprell, based in the UAE, is looking to qualify as a contractor to Saudi Aramco under which contractors take up offshore engineering, procurement and construction and projects in the oil and gas sector.
An important aspect of this process is the Kingdom’s Total Value Add (IKTVA) program, which is intended to boost local investment and meet Vision 2030 objectives.
Lamprell strategy is to set up a Saudi limited liability company with KSA’s Asyad Holdings as a local partner.
Equipment and engineering services company Sparrows Group has recently been granted commercial registration to operate in KSA after it created a local JV.
Sparrows said: “A locally established company with the relevant commercial registration is a major requirement. The IKTVA program is sponsored by Saudi Aramco and is designed to drive increased investment, economic diversification, job creation and workforce development within the Kingdom.”

Decoder

The oil price recovery means there are more opportunities in the oil and gas sector after years of stagnation, though the KSA market has been relatively strong.


Rolls-Royce, others still preparing for hard Brexit

Rolls-Royce is continuing with contingency plans as uncertainty grows over whether Prime Minister Theresa May’s Brexit plan will receive backing. (AP Photo/Kin Cheung))
Updated 17 November 2018
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Rolls-Royce, others still preparing for hard Brexit

LONDON: British aero-engine maker Rolls-Royce said it was continuing with contingency plans as uncertainty grows over whether Prime Minister Theresa May’s Brexit plan will receive parliamentary backing.

“This agreement is only a draft,” CEO Warren East told BBC radio on Friday, joining a line of industry captains urging politicians to be pragmatic and not torpedo an agreement that would allow UK-EU trade to keep flowing.

“We are going to continue with our contingency plans and that includes buffer stocks so that we have all the logistical capacity that we need to carry on running our business.”

Manufacturers such as Rolls-Royce fear new customs duties and red tape could threaten the just-in-time delivery of thousands of parts on which they depend if Britain crashes out of the EU on March 29.

May’s office has released statements from a number of major companies such as Diageo, the London Stock Exchange and Royal Mail in support of her deal.

The British pound clawed back losses as May clung to her Brexit plan, and Britain’s FTSE 100 and FTSE 250 both recovered, rising 0.2 and 0.3 percent respectively after Thursday’s sharp sell-off.

But she is still grappling with the biggest crisis of her premiership following the resignation of key ministers in protest over the draft deal, and faces a tough battle to get it through Parliament if she survives. “The political situation remains uncertain,” German carmaker BMW said
late on Thursday, adding that it would continue to prepare for
the worst-case scenario, which is what a no-deal Brexit would represent.

BMW’s Mini plant in Oxford accounts for 13 percent of Britain’s total car production, with nearly 220,000 cars built there last year.