Presentation to INSEAD MBA Class - Abu Dhabi, March 2017

1. Doing Business in the Middle East
An Energy Perspective …
INSEAD Abu Dhabi – 1st March 2017

2. The big picture
• Oil & Gas Prices: OPEC v US Shale
and the LNG Glut
• Impact of Debt and Deficits: finance,
consolidation & belt tightening
• Trump, Brexit & The EU: Impact on
Iran
• Technology: Cost Reduction &
Recovery Rates - International Oil
Company (IOC) + National Oil
Company (NOC) Partnerships
(Chinese)
• Strength of the $ and local
currency pegs
• Regional conflict and perceptions
around security
• Local Content – IKTVA (In
Kingdom Total Value Add)

3. Saudi to launch $30-50 billion renewable energy
program. UAE 50% non CO2 energy by 2050

4. The Opportunity: Forces at Work
• Demographic & Industrial growth
– Power (Gas, Nuclear & Renewable, Water) &
LNG
– Offshore
– Petrochemicals
– Refined product
• Fiscal reserves under pressure
– Defence
– Education
– Subsidies & VAT introduction
• Privatisation of Aramco – Economic & energy
diversification
• Restructuring – A’OPCO/Zadco; Qatargas/Rasgas;
NGSCO/ADNATCO
• Leadership change in ADNOC, KPC, QP and Saudi
Aramco
• Award delays and existing projects moving slowly,
budget squeeze and discounts – but turning the
corner
• World cup, Shams Dubai, Expo 2020 & Vision 2050 Source: SNC Lavalin
oil price
@ $40

5. The Lessons Learned
• Lump sum turn key where low price
always wins
• Monopolistic behavior by NOCs and
rigid supply chain
• Spotting gaps in the
Market/Differentiation/Technology is
the key
• Market Connectivity/Local
Presence/Local Partnerships
• Cash Flow & Defensive Credit
Control and Payment Security
• Onerous T&Cs passed down the
food chain by experienced
Engineering Procurement
Contractors (EPC)
• One size does not fit all - Territory
by Territory
• Compliance– Business Ethics and
Anti-Corruption
• Hanging onto the A team …

6. Projects

7. Future Projects - $374 billion
• Raising oil production in
Kuwait, Abu Dhabi and
Oman. Maintaining in KSA
& Qatar
• Increasing refining &
petrochemical capacity for
domestic demand and
jobs
• Increase gas production
everywhere except Qatar
• Unconventional (tight gas)
& renewable energy
• Focus on offshore in KSA,
Abu Dhabi, Qatar

8. Capital Projects (including construction)

9. Iran
• Large market
– Greenfield
– Brownfield
• Post sanctions gap filled by
Korea, China and GCC
• Sanctions
◦ Banks
◦ Germany and France
◦ Marketing
◦ Relationships
• Visas and infrastructure
• Annual International Oil Show
• Choosing a partner

10. • Free Zones vs Onshore
• Abu Dhabi vs Dubai and other 5
Emirates …
– Liberal regional safe haven
– Diversified economy
• Economist Intelligence Unit basket 30-
40% less expensive than London
• Facilities – cycling, swimming, sailing,
boating etc (6 months …)
• Restaurants & malls: Shopping is also
leisure, sport and hobby
Energy Business Catalyst
The small stuff …
• 95% of the workforce are expat, but
extremes
– Employment legislation ?
• Volatility in house prices and rents
– Boom & bust credit bubbles
• Unscrupulous landlords & sharp
practice (rents are rising)
– 100% upfront and repairing
leases
– Hidden Costs
• Pensions own provision
• School fees & healthcare
• Lot of paperwork