Going local in OmanAugust 3, 2015
AWS Engineering managing director Abdullah Hassan Al Maqbali tells TOGY about how government policies to level the playing field for super local community contractors are harming competition. AWS Engineering is the engineering, procurement and construction arm of Rimal Global Technical Services, a holding company founded in 2010 to mainly service the oil and gas industry.
Is it difficult for a subcontractor to become a direct contractor of upstream companies?
The major challenge is the mentality of the clients. For example, majority-nationalised Petroleum Development Oman (PDO) has many departments that study contracts, each with their own criteria. The lack of standardised criteria makes it more difficult for a local services company to meet expectations.
The biggest challenge for us has been to understand the requirements of each department. Some of the PDO’s departments support local services companies and others ignore them. The same applies for private operators.
SLCCs were established by the Ministry of Oil and Gas and PDO to ensure that some of the profits generated by the hydrocarbons industry trickle down to the local community, especially those living in the concession areas. Excluding PDO, it is surprising that the majority of Omani-owned services companies are failing to win contracts from international firms.
It is difficult to penetrate international giants because they have their own preferred contractors. We need the big oil and gas producers such as BP Oman, PDO and US Occidental Oman to change their strategies. They need to trust small Omani-owned businesses and take the risk to technically support them by offering small contracts to emerging companies and align themselves with their needs.
It is difficult for any local oilfield services company or engineering and construction firm to develop staff and expertise without gaining experience by winning and executing contracts.
Has the development of SLCCs and local community contractors (LCCs) harmed small Omani companies that do not have this status?
We are a privately funded oil and gas company owned and managed by Omani stakeholders. Similar to LCCs and SLCCs, we are also a local company and should have equal opportunities. Companies registered as an LCC or SLCC have a single source of projects. PDO awards contracts to these companies regardless of their experience. This form of government intervention in the oil and gas industry is anti-competitive and will result in inefficiency.
Should state-owned oil and gas companies be denationalised, considering low oil prices?
The government and PDO have experiences of such oil cycles before, and they will increase production to maintain the margins for the stakeholders. To boost productivity, nationalised companies such as Oman Oil Refineries and Petroleum Industries Company, and drilling company Abraj Energy Services should be privatised.
In general, independent companies are more effective than publicly owned firms as they are profit-driven. Private businesses do not have to promote the interests of the government and will take decisions based solely on efficiency and value. Strong public sector involvement in the oil and gas industry slows down competition.
Is it difficult for Omani companies to find the right personnel to fill positions?
It is easier to fill senior management positions when compared to labour-intensive posts. Omanis would love to work no matter what the job is. There is a common misperception that Omanis will not accept work as a bricklayer or pipefitter, and this is simply not true. The majority of staff constructing the main oil pipeline stretching across the country in 1945 were Omanis. There are a lot of nationals that are willing to work, but they are simply not provided the opportunity.
I disagree with the Ministry of Manpower’s decision to limit the number of expatriates entering the market. Even though my priority is to develop my country and the indigenous population, and I am more comfortable dealing with Omanis, the government should not restrict my recruiting options as a private corporation.
For more news and features from Oman, click here.