The UAE’s oil and gas market dynamics

UAE

Atif Arikat, managing director of Al Ghaith Energy, talks to The Energy Year about how energy market dynamics are evolving in the UAE, the company’s strategy for competing with international EPC firms and its plans for upgrading its manufacturing capabilities. Al Ghaith Energy provides oil and gas services in Abu Dhabi and the region.

How do you see energy market dynamics evolving in the UAE?
We are seeing a major boom in the oil and gas industry worldwide due to the high price of oil. We also witnessed a significant shift in national strategies: after witnessing the EU’s supply issues resulting from the Russia-Ukraine conflict, everyone has learned that you should not depend on a single supply source.
We are equally aware of our dependence upon China when it comes to imports. Shipping costs have increased from USD 900 for one of our typical shipments to USD 6,500, and we need to further invest in infrastructure in order to have a continuous supply of strategic equipment and products.
In order to increase national security, ADNOC is currently encouraging companies to upgrade their in-country manufacturing capabilities. We are watching the UAE become a regional manufacturing hub and are working on securing information and technology transfer into the country, which will bring added value and create new job opportunities.

What contracts and projects are you working on?
Some years ago, we bought some struggling companies which we have managed to revitalise and help to secure contracts. Having them now under our umbrella adds onto the services we can provide. We also have a big fabrication yard at our disposal now.
We recently landed a five-year contract with ADNOC for offshore fabrication platform refurbishment, tie-ins and wellheads. Under this contract, we are currently working on 11 offshore rigs.
In the context of the billion-dollar investments being made in Abu Dhabi to revamp brownfields and develop greenfields, in the last year we have secured USD 1.5 billion in drilling services and equipment contracts.

What efforts are you currently undergoing to upgrade your manufacturing capabilities?
One major development is the USD 30-million Christmas tree factory we are building with our partner Baker Hughes, which we will have completed by December 2023. We are heavily investing and building everything while Baker Hughes will be renting out the facilities over a number of years.
We are also in the negotiation process to build an electrical submersible pump and well completion equipment factory with a Russian company. This project is worth around USD 5 million and will add onto our technological capabilities.
Overall, we see our revenue streams divided into 20% from fabrication and manufacturing and around 60% coming from services and supplies as we represent more than 100 international manufacturers.

What is your strategy for competing with international EPC companies?
Moving forward, ADNOC has announced it will give its drilling services work to one company under an integrated drilling services contract, which only certain players such as Schlumberger, Halliburton, Baker Hughes and now ADNOC Drilling can fulfil. However, we are capable of offering around nine services which other players cannot, and we are looking to propose integrated business services (IBS) to ADNOC for some of these new drilling activities.
If they trust us with 20-30 wells and we manage to showcase the added value we can bring to them, especially in terms of ICV [in-country value] and the cost reduction of 30% that we have demonstrated in other contracts with ADNOC, we will be well positioned to expand our operations further in the region. In that regard, we are looking to integrate EPC capabilities for bigger projects such as gasoline stations, pressure vessels, skids, control valves and tanks, among others.

How will you expand your operations in the years to come?
We have started working with an American company and in partnership with ADNOC to reclaim calcium bromide and other oil chemicals used in wells which usually go to waste after use. We are building a plant that will effectively be able to recycle these products thanks to the technologies the US company will procure.
Regarding regional expansion we are looking at Libya and Iraq but we believe it is not safe enough for now to send our employees to these locations and do not want to put them at risk. In the future, once we secure greater cashflows, we plan to set up a research and development unit to further boost our capabilities.

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