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.


Careem looks to raise up to $200 million in China

Updated 20 November 2018
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Careem looks to raise up to $200 million in China

  • Investment bank China International Capital Corporation (CICC) is advising Dubai-based Careem, but it was not immediately clear when or if a deal would be finalized
  • Careem said in October it had secured $200 million in a new funding round from existing investors

HONG KONG: Careem, Uber’s main Middle East rival, is looking at raising between $100 million and $200 million from Chinese investors, a source with direct knowledge of the matter told Reuters.
Investment bank China International Capital Corporation (CICC) is advising Dubai-based Careem, but it was not immediately clear when or if a deal would be finalized, the source said, adding there was a lack of familiarity and interest among Chinese investors in Middle Eastern start-ups.
Beijing-based CICC and Careem both declined to comment.
Reuters reported on Monday that CICC and New York-based investment bank Jefferies were both advising Careem on potential investment options and capital raising, including a possible Middle East M&A deal with Uber.
Careem, which counts German car maker Daimler and China’s largest ride-hailing company DiDi Chuxing among its other backers, competes head-to-head with Uber in most of the major cities in the Middle East.
Careem said in October it had secured $200 million in a new funding round from existing investors, and that it expected to raise more to finance expansion plans.
That investment, combined with previous fund raising and company growth into new markets and segments, gave Careem an estimated valuation of more than $2 billion.
Reuters reported in March that Careem was in early talks to raise as much as $500 million.