Andrews Kurth Middle East Newsletter The Driving Force For Your International Business

Transcription

1 Andrews Kurth Middle East Newsletter The Driving Force For Your International Business

2 STRAIGHT TALK IS GOOD BUSINESS. Welcome to the issue of the Andrews Kurth Middle East newsletter. In this edition, we look forward to some of the issues for the Middle East and North Africa oil and gas industry in 2015 and revisit some of the themes that we have explored during the course of The latter part of the last year was dominated by the decline in the price of oil and one consequence of this is a renewed level of interest from the industry in opportunities in the Middle East. Working in partnership with the Energy Industries Council, we will deliver a seminar in Abu Dhabi in January that explores the key legal and commercial issues facing UK companies entering into the Middle East or expanding existing operations into other countries within the region. Renewables will play an increasingly important part in the energy mix across the Middle East and North Africa in the years ahead. Our colleague Mark Thurber will moderate a panel on securing project finance for renewable energy projects in the region during the World Future Energy Summit in Abu Dhabi in January. In our Upcoming Events section, we highlight several key events in Q1 of 2015 where Andrews Kurth will be participating and which will be of interest to our clients and contacts. In conclusion, we hope that 2014 was a successful year for you and your team and we look forward to working with you in Best regards, Hugh Fraser, Office Managing Partner, Dubai

3 The ADIPEC Report - Lower Oil Price Renews Focus on Middle East Andrews Kurth Middle East Newsletter The 2014 Abu Dhabi International Petroleum Exhibition & Conference (ADIPEC) was the largest in the event s history. It attracted more than 2,000 exhibiting companies, 60,000-plus delegates and representatives from 98 countries. Andrews Kurth had significant representation at the event from its teams in Dubai, the USA and China as part of its Intelligent Energy Law initiative. The full Middle East team was joined by Houston-based partner Jeff Dodd, Beijing partner Jerry Li and Beijing associate Jane Jiang. ADIPEC is firmly established as the Middle East s premier event of its kind, on a par with OTC in Houston and Offshore Europe in Aberdeen, and this was emphasized by the scale and calibre of the event held in the UAE s capital last month. ADIPEC re-emphasized that the Middle East and North Africa (MENA) region contains more than half of the world s proven conventional oil reserves and 42 percent of the world s proven conventional gas reserves making it one of the world s most significant energy markets. The decline in the oil price in the fourth quarter of the year has served to focus the global industry on the Middle East as it represents a market with lower production costs and a significant pipeline of capital projects either underway or in planning. There are major opportunities across the region for international oil companies, independent exploration and production companies, EPC contractors and suppliers of specialist technologies and know-how. Key themes at ADIPEC, and other industry events during the year, were the price of oil, the need to deliver affordable energy, and the increasing demand within the sector for technology and innovation to overcome the challenges faced in exploration and production. Hugh Fraser, managing partner of Andrews Kurth s Dubai office, said: The growth of ADIPEC continues to reflect the significance of the Middle East to the global energy market. The current oil price position has served to refocus many minds on the region and we are seeing a rebalancing of global industry priorities away from higher cost environments. While there may be some slowing up of developments because of the lower oil price, in reality the costs of production in the region are some of the lowest in the world and it is shale gas, heavy oil and deepwater projects in other parts of the globe which will suffer most from the lower oil price. We have seen a major uplift in interest from clients targeting business in the Middle East since October and we expect to see this continue during 2015 as the supply chain seeks out new opportunities for its people and technologies. A past performance or prior result is no guarantee of a similar future result in another case or matter. Andrews Kurth is responsible for the content of this website. Andrews Kurth, the Andrews Kurth logo and Straight Talk Is Good Business are registered service marks of Andrews Kurth LLP. Andrews Kurth LLP is a Texas limited liability partnership. Andrews Kurth (UK) LLP is authorized and regulated by the Solicitors Regulation Authority of England and Wales (SRA Registration No ). Andrews Kurth (Middle East) DMCC is registered and licensed as a Free Zone company under the rules and regulations of DMCCA.

4 World Future Summit in Abu Dhabi to Focus on Renewable Energy Andrews Kurth Middle East Newsletter Renewable energy will play an increasingly important role in the Middle East and North Africa (MENA) in the coming decades. By 2020, up to 37 gigawatts of renewable energy are expected to come on line in the region and investments in renewables may reach US$50 billion. Underpinning these projections are government initiatives with significant visions for long-term growth. The Kingdom of Saudi Arabia has committed US$109 billion to the development of 41 gigawatts of solar energy as part of a broader plan to deploy 54 gigawatts of clean energy by In Morocco, a US$9 billion solar-power project, accounting for 38 percent of country's installed power generation by 2020, is currently underway. Jordan has targeted 10 percent of power from renewable sources and expects to invest up to US$2.1 billion by 2020 while the Egyptian government will invest US$1billion in solar energy as it looks to increase the country s share of renewables to 20 percent by Meanwhile, renewable energy investments in sub-saharan Africa particularly in South Africa, Kenya and Ethiopia are expected to grow to more than US$7 billion by The World Future Energy Summit (WFES) 2015, taking place in Abu Dhabi from 19 to 22 January, is set to attract government delegations from across MENA, emphasizing the importance of the event in fostering initiatives that address renewable energy issues. As a flagship event of Abu Dhabi Sustainability Week (ADSW), WFES is firmly placed as the gateway to maximize investment and ensure widespread adoption of renewable energy throughout MENA countries. Key items on the WFES 2015 agenda, highlighting the region s renewable energy investment potential, include: the UAE s roadmap to a diversified energy future, the ambitious renewable-energy expansion plans underway in Saudi Arabia and Morocco s transition from an energy importer to a net energy exporter. During WFES, Andrews Kurth partner Mark Thurber will moderate a panel on securing project finance for renewable energy projects in the Middle East. He has advised clients on development, acquisition and disposition, joint ventures and financings involving solar, wind, waste-to-energy, gas-to-liquids and other non-traditional energy development projects around the world. Renewable energy, and solar energy in particular, have achieved political priority throughout most of the world. Developers have a variety of potential approaches and regional targets available to them in developing utility-scale renewable energy projects but chief among these regions is the Middle East, currently in the early stages of a major renewable initiative. The presentation will be of particular interest to project developers, chief financial officers, project finance bankers, investment bankers and private equity professionals and will take place on 20 January. For further information or to register, please contact laurenjacobs@andrewskurth.com. A past performance or prior result is no guarantee of a similar future result in another case or matter. Andrews Kurth is responsible for the content of this website. Andrews Kurth, the Andrews Kurth logo and Straight Talk Is Good Business are registered service marks of Andrews Kurth LLP. Andrews Kurth LLP is a Texas limited liability partnership. Andrews Kurth (UK) LLP is authorized and regulated by the Solicitors Regulation Authority of England and Wales (SRA Registration No ). Andrews Kurth (Middle East) DMCC is registered and licensed as a Free Zone company under the rules and regulations of DMCCA.

5 EIC and Andrews Kurth to Host Legal and Contractual Risk Management Seminar for UK Companies in Abu Dhabi Andrews Kurth Middle East Newsletter UK companies will gain a detailed insight to managing legal and contractual risk in the Middle East at a one-day seminar in Abu Dhabi on 27. Andrews Kurth Middle East, in conjunction with the Energy Industries Council (EIC), will provide an analysis of the key legal issues that UK companies need to be aware of in order to enjoy successful business practice in the six Gulf Cooperation Council countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates). Billed as a survival guide for UK companies, the seminar will be held at the Yas Island Rotana Hotel in Abu Dhabi, starting at 11.30am. The day s agenda will include setting up and expanding businesses in the Middle East, dealing with local partner agreements, client and supplier contracts, employment contracts, intelligent energy law, taxation and customs duties, business ethics and anti-corruption, and an update on trade sanctions. The presenting team will include Hugh Fraser, managing partner of Andrews Kurth s Dubai office and counsel Heather Williams. Houston-based partner Dena Palermo, who specialises in litigation and corporate investigations, has also had significant input to the seminar content on anti-bribery and corruption issues. Jeff Dodd, leader of the Andrews Kurth intellectual property team, has also provided the core content for the session on intelligent energy law. Heather leads Andrews Kurth s Middle East legal risk management initiative, which includes energy sector contracts risk management and dispute prevention, regulatory compliance including trade sanctions and anti-corruption compliance, due diligence and legal audits and dispute resolution services. Her experience spans over 18 years of practice, with eight years of experience in energy sector projects in the Middle East. Hugh Fraser said: The Middle East is an increasingly important market for UK companies working in the oil and gas field and we are delighted to be partnering with the EIC to explore some of the key issues that market entrants have to consider to trade successfully in the region. Our seminar will equip companies entering this large and diverse market, or those which are expanding in the region, with a clear picture of all the major issues they need to address to achieve a successful operation. The EIC is a leading trade association providing dedicated services to help members understand, identify and pursue business opportunities globally. Established in 1943, the EIC is a not-for-profit organisation with a membership of over 650 UK-registered companies that deliver goods and services to the energy industry worldwide. For more information on the seminar or to register, please dubai@the-eic.com. A past performance or prior result is no guarantee of a similar future result in another case or matter. Andrews Kurth is responsible for the content of this website. Andrews Kurth, the Andrews Kurth logo and Straight Talk Is Good Business are registered service marks of Andrews Kurth LLP. Andrews Kurth LLP is a Texas limited liability partnership. Andrews Kurth (UK) LLP is authorized and regulated by the Solicitors Regulation Authority of England and Wales (SRA Registration No ). Andrews Kurth (Middle East) DMCC is registered and licensed as a Free Zone company under the rules and regulations of DMCCA.

6 The Middle East Energy Sector Key Themes for 2015 Andrews Kurth Middle East Newsletter In December 2013, we published a list of the top 10 Middle East and North Africa (MENA) opportunities and challenges that clients would face during One year on, we look again at some of those issues and what influence they will exert on the Middle East energy sector in 2015 and beyond. 1. Oil Price and the US Shale Oil and Gas Revolution The latter half of 2014 was dominated by the 40 percent drop in the oil price and the significant impact this has had on oil-producing countries and the global economy. Supply and demand concerns will inevitably dominate the year ahead, but one outcome of the current price slide is a focus on lower cost production regions including the Middle East as the supply chain seeks alternative customers for its goods and services as demand stalls in higher cost markets. It will be interesting to see to what extent the lower oil price curbs the US shale oil and gas production boom which US$100 plus oil has permitted over the last five years and which has been the key factor in the recent radical change to the demand/supply dynamics. 2. Volume, Scale and Complexity of Energy Projects The scale of capital investment in the Middle East makes it a market impossible to ignore, particularly now that the lower oil prices are stalling investment in higher cost areas. Projects valued in excess of US$3 trillion are underway or planned in the region (defined for this purpose as comprising the six Gulf Cooperation Council countries Saudi Arabia, United Arab Emirates, Kuwait, Oman, Bahrain and Qatar plus Iraq and Iran). The majority of these relate to upstream oil and gas, downstream (including refineries, LNG and GTL), petrochemicals and related infrastructure projects. Iraq, Saudi Arabia and Abu Dhabi all have work streams of capital-intensive projects that represent a major draw for EPC contractors and their supply chains. 3. Advanced Technology and Know-how The Middle East has long been associated with easy oil and low tech, low cost production models but the petroleum industry is now balancing the politics of resource nationalism with the need for international oil companies and their technology. Factors including the rapidly increasing need for enhanced oil recovery (EOR), sour gas, heavy oil, tight gas, LNG, GTL, clean fuels refineries, carbon capture and storage, nuclear and solar technologies are driving new requirements for advanced technologies and know-how, much of it garnered by joint ventures with IOCs and their supply chains. A further drive to advanced technology will follow if the current and prospective Red Sea and East Mediterranean exploration and appraisal programmes bear fruit, as these will bring deepwater fields into play in a region dominated by onshore and shallow water production. 4. Domestic Energy Requirements Providing energy to fuel domestic economic and population growth remains a key priority for the region with more gas needed to achieve this, particularly in Saudi Arabia, Kuwait and the UAE. This is driving new exploration campaigns, production of unconventional and sour gas and diversification of supply to embrace nuclear and solar energy production. 5. Iraq Notwithstanding the ongoing security issues in parts of the country, Iraq s oil and gas industry continues to gather momentum. There will be increasing commercial advantages for, and pressures on, industry players to expand their presence and activities in Iraq.

7 6. Iran The oil and gas industry continues to await the rehabilitation of Iran in the international community. The prospective return of Iran to more normalized relations with the USA and the West in general would open up a market that has been starved of technology and capital investment for the best part of a generation. However, should this turn of events ultimately come to pass, it will remain to be seen whether or not Iran persists in a resource nationalism posture or embraces the NOC/IOC partnership approach which has operated so successfully in Qatar and now Abu Dhabi. 7. Cyber Security Cyber security has become a significant concern for the region s petroleum industry. The need to manage and contain this risk will be major opportunity for specialist service providers who can contain and defeat these attacks, especially as we move into the era of the digital oilfield. 8. Independent E&P Companies and Frontier/High-risk Opportunities The activities of NOCs as well as IOCs continue to be complemented by independent exploration and production companies focused on niche or frontier opportunities, often at the high risk/high reward end of the spectrum. This is especially so in Kurdistan in the north of Iraq, where independents are making their mark. But the independents also play a key role in Oman, Yemen and the northern emirates of the UAE. These companies may well serve as a source of future farm-in and even full merger and acquisition activity from the IOCs and/or NOCs when the development capital requirements of the independents, reserve replacement targets of the IOCs and advanced technology and know-how appetites of the NOCs align. 9. Sovereign Wealth and Outward Investment Finally, the Middle East is home to many of the world s largest sovereign wealth funds, especially in Abu Dhabi, Kuwait, Saudi Arabia and Qatar. These are now major outward investors with US$2 trillion dollars of combined investments. Abu Dhabi has gone a step further the emirate s state-owned TAQA and Mubadala Petroleum are operators of petroleum assets and not simply investors. Mubadala Petroleum is in turn a subsidiary of Mubadala Developments, which is now a leading player in the international renewables industry. This massive buying and investment power will continue to exert its presence in the international petroleum industry in the years ahead. 10. In-Country Value and Localization The Arab Spring events of 2011 and their aftermath still concentrate the minds of regional governments and this will still feed through to the energy sector in the form of continued focus on in-country value (ICV) policy requirements on local employment, local content, technology transfer and investment in in-country facilities. A past performance or prior result is no guarantee of a similar future result in another case or matter. Andrews Kurth is responsible for the content of this website. Andrews Kurth, the Andrews Kurth logo and Straight Talk Is Good Business are registered service marks of Andrews Kurth LLP. Andrews Kurth LLP is a Texas limited liability partnership. Andrews Kurth (UK) LLP is authorized and regulated by the Solicitors Regulation Authority of England and Wales (SRA Registration No ). Andrews Kurth (Middle East) DMCC is registered and licensed as a Free Zone company under the rules and regulations of DMCCA.

8 STRAIGHT TALK IS GOOD BUSINESS. Upcoming Events We are pleased to announce that Andrews Kurth will be attending the following upcoming events. If you have plans to be at any of these conferences, we would be delighted to meet with you. If you would like to meet with us or have any questions, please contact World Future Energy Summit Abu Dhabi, United Arab Emirates (19-22 ) SPE Middle East Unconventional Resources Conference and Exhibition Muscat, Sultanate of Oman (26 28 ) Energy Industries Council (EIC) Training Managing Legal and Contractual Risk in the Middle East: A Survival Guide for UK Companies Dubai, United Arab Emirates (27 ) Subsea Expo Aberdeen, United Kingdom (11-13 February) Subsea Tieback Forum & Exhibition New Orleans, USA (3-5 March) SPE Digital Energy Conference and Exhibition Houston, USA (3-5 March) SPE Middle East Oil & Gas Show and Conference Bahrain (8-11 March) Arctic Technology Conference Copenhagen, Denmark (23-25 March) China International Petroleum & Petrochemical Technology and Equipment Exhibition Beijing, China (26-28 March)

9 AUSTIN 111 Congress Avenue Suite 1700 Austin, TX BEIJING Room 2007, Capital Mansion No. 6 Xin Yuan Nan Lu Chao Yang District Beijing, China DALLAS 1717 Main Street Suite 3700 Dallas, TX DUBAI Andrews Kurth (Middle East) DMCC 45th Floor Mazaya Business Avenue, BB2 Jumeirah Lakes Towers P.O. Box Dubai, UAE HOUSTON 600 Travis Suite 4200 Houston, TX LONDON Andrews Kurth (UK) LLP 16 Old Bailey London EC4M 7EG United Kingdom NEW YORK 450 Lexington Avenue New York, NY RESEARCH TRIANGLE PARK 4505 Emperor Boulevard Suite 330 Durham, NC THE WOODLANDS Waterway Plaza Two Woodloch Forest Dr. Suite 200 The Woodlands, TX WASHINGTON, DC 1350 I Street, NW Suite 1100 Washington, DC Copyright 2015 Andrews Kurth (Middle East) DMCC. Andrews Kurth, the Andrews Kurth logo and Straight Talk Is Good Business are registered service marks of Andrews Kurth LLP. All Rights Reserved. This brochure has been prepared for informational purposes only and does not constitute legal counsel. This information is not intended to create (and receipt of it does not constitute) a lawyer-client relationship. Readers should not act on this information without seeking professional counsel. A past performance or prior result is no guarantee of a similar future result in another case or matter. Andrews Kurth (Middle East) DMCC is registered and licensed as a Free Zone company under the rules and regulations of DMCCA. Andrews Kurth (UK) LLP is authorized and regulated by the Solicitors Regulation Authority of England and Wales (SRA Registration No ). Andrews Kurth LLP is a Texas limited liability partnership. Attorney Advertising