Trusted counsel for trying times
Chadi A. Salloum, corporate/energy partner at Morgan, Lewis & Bockius LLP, talks to The Energy Year about how companies’ advisory needs are changing during the Covid-19 crisis as well as how governments and energy companies in the region are responding. Morgan, Lewis & Bockius LLP is a global law firm that provides comprehensive corporate, transactional, litigation, and regulatory services in major industries.
How have the types of client queries you receive changed since the outbreak of the Covid-19 crisis?
Particularly in this region, I think much of the initial advice we were being asked for from our clients involved business continuity and workforce issues, such as moving their workforces into a remote working environment and issues around hiring. There were also a lot of concerns around contracts and force majeure clauses and ensuring compliance with government directives.
As we have progressed through the crisis, the queries have shifted to more specific questions related to their own businesses. We are seeing clients begin to plan for the “return to work” in light of the relaxation of social distancing measures in the UAE, and we are receiving a lot of questions in relation to this.
We consider ourselves fortunate to continue to be busy in many of our core transactional practices. We work heavily on the investment side and represent a number of private sector and sovereign investors, many of which are going ahead with investment programmes they already had in place, particularly in relation to funds. In addition, certain M&A transactions already in the pipeline are progressing, and we continue to see RFPs for various energy and infrastructure projects. This is very encouraging.
Have governments in the region announced any measures to support businesses in general?
We have seen governments around the globe introduce support measures for businesses across sectors, from the furlough scheme in the UK to reduce the payroll burden on firms while protecting jobs to the CARES Act in the United States, as well as the facilities that energy companies can take advantage of such as loans and tax credits for employee retention.
In this region, the UAE has been quick to act with a stimulus package of approximately USD 70 billion, with the central bank urging banks to process more finance applications from individuals, corporations and SMEs whose business operations are affected by the Covid-19 pandemic. Also, Saudi Arabia has announced stimulus packages exceeding USD 32 billion to support the private sector and the banking sector, with measures to protect salaries in the private sector implemented as well. Certain companies operating in the energy sector can also avail themselves of these support measures.
How have international energy companies operating in the region been dealing with the current environment?
There is no doubt that the decline in oil prices fuelled by Covid-19-related demand issues and the increase (until recently) in global production have led to an international decline in E&P activity and to a shift in focus to balance sheet health. Certain international energy companies will engage in an overall review of their projects (including in the region) as they seek to focus on cashflow management during this period.
Having said that, national energy champions in the region are expected to continue to invest in a measured approach to deliver on their growth strategies in collaboration with the private sector, even during these challenging times. In addition, there have been positive announcements in the renewable energy space during this period, such as the recent signing of a deal in the UAE to generate electricity from waste and Saudi Arabia announcing the shortlisted bidders for the second round of its National Renewable Energy Programme tender, which includes four PV schemes totalling 1.4 GW.
Have you taken any steps to better position your team to serve clients during the pandemic?
Morgan Lewis has long recognised the importance of employing a strategic, business-focused approach to addressing client matters. That has never been as important as right now, when companies across all industries are looking for practical guidance on ways to protect their businesses and their people. Our cross-disciplinary teams take a comprehensive approach to understanding our clients’ industry-based needs, providing a deep well of resources across broad sectors including energy.
Morgan Lewis has a comprehensive Covid-19 resource page covering unfolding developments on a multitude of issues, including healthcare provider issues, business supply chain disruption, data privacy concerns, employer questions, energy and environmental industry ramifications, financial services guidelines, immigration status requirements, life sciences protocols, tax implications and ongoing government guidance from around the world.