BAGHDAD // Big Oil has led interest in Iraq's oil sector since it was thrown open to investment, but the country also promises to be lucrative for oil service firms quietly fixing wells and pipelines in the background.
Oilfield service companies ranging from big players like Weatherford International to small regional outfits have begun work or are sniffing out opportunities in Iraq, which must upgrade its dilapidated infrastructure after years of war and neglect.
Unlike high profile oil majors, which have to skirt resistance from politicians wary of signing away Iraq's oil wealth to foreigners, service firms can quietly subcontract directly with the majors, avoiding lengthy talks with officials.
The sheer size of the market in Iraq ? which plans to nearly triple oil output to over 7 million barrels per day ? is unrivalled, making it increasingly important for an oil services industry facing a slump in major markets like North America due to spending cuts by energy producers.
In fact, the amount of oilfield development planned in Iraq in the coming few years will likely strain the oil service industry's capacity and lead to inflation in the industry.
"Iraq is the place to be for oilfield service firms," said RP Eddy of Ergo, an Iraq-focused research firm.
"There is much less political risk than if you're a major. I'd be shocked if any oilfield service firm did not make a major effort to be here in the next few years."
Iraq is striking deals with several oil companies that could transform it into the world's third-largest oil producer and rehabilitate an oil sector that has suffered from years of war, sanctions and most recently the sectarian violence triggered by the 2003 US-led invasion.
Much of the attention has centred on supermajors like Exxon, whose consortium snapped up an initial deal to develop the West Qurna field, while BP and China's CNPC sealed a $15 billion deal to develop the Rumaila field.
However, oilfield service firms are now quietly building a presence.
The market for oilfield services in Iraq will jump from $1.3 billion in 2010 to $8 billion in 2014, estimates Ergo.
Capital spending on oilfield services in Iraq in 2011 alone will be five times that of similar spending in all Gulf Cooperation Council nations put together, Ergo believes.
A yardstick for judging the value of looming service work may be a short-lived joint venture agreed in February between Iraq and British firm Mesopotamia Petroleum Co. The project, aimed at drilling 60 new wells a year but terminated in July, kicked off with initial capital of $400 million.
In May, US company Weatherford won a $224 million contract to drill 20 wells in Iraq's south and it expects to run a $300-$400 million programme in 2010.
Other US firms including Schlumberger . N>, Halliburton and Baker Hughes have also said they are in talks or are looking to enter the Iraqi market.
Last month, a British delegation with executives of seven firms, including an energy technology supplier and a land drilling contractor, held talks with Iraqi officials in Baghdad.
"Iraq is going to be a very large market, and my peers will not disagree with that," Weatherford chief executive Bernard Duroc-Danner told analysts last month. "The only difference in views, if we have any, is on the timing of it."
Some say the timing will be sooner rather than later.
"The services market will kick off in the next four months in a big way," said Adrian Green, a partner with Upper Quartile, which advises firms on investments in Iraq. "Iraq has been starved of technology, training and development, and capital investment in the service sector for 30 years."
In the meantime, smaller Middle Eastern firms have been consolidating their position in Iraq, said Ergo's Mr Eddy.
While none doubt the volume of work potentially available, there are no guarantees on margins.
Iraq pushed a hard bargain in the first post-invasion oil licensing round in June and oil majors working on already slim margins will offer similarly tight terms to subcontractors, said Samuel Ciszuk, Middle East energy analyst at IHS Global Insight.
Even if Iraq prefers western expertise and the latest technology to modernise its outdated infrastructure, tight terms favour lower-cost Chinese service firms.
BP, for instance, will rely on its Chinese partner CNPC to provide pipes and equipment for Rumaila. The Chinese firm's involvement was crucial in helping keep the consortium's cost down and allowing it to agree to Iraq's terms.
Western oil service companies will stay out if the margins are too small for them, analysts say.
"Projects have to be demonstrably and materially commercial," said Mr Green. "There is no charity angle here."
*Reuters
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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The specs
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The specs
Engine: 4.0-litre flat-six
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The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
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Company%20Profile
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Tailors and retailers miss out on back-to-school rush
Tailors and retailers across the city said it was an ominous start to what is usually a busy season for sales.
With many parents opting to continue home learning for their children, the usual rush to buy school uniforms was muted this year.
“So far we have taken about 70 to 80 orders for items like shirts and trousers,” said Vikram Attrai, manager at Stallion Bespoke Tailors in Dubai.
“Last year in the same period we had about 200 orders and lots of demand.
“We custom fit uniform pieces and use materials such as cotton, wool and cashmere.
“Depending on size, a white shirt with logo is priced at about Dh100 to Dh150 and shorts, trousers, skirts and dresses cost between Dh150 to Dh250 a piece.”
A spokesman for Threads, a uniform shop based in Times Square Centre Dubai, said customer footfall had slowed down dramatically over the past few months.
“Now parents have the option to keep children doing online learning they don’t need uniforms so it has quietened down.”
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
Electric scooters: some rules to remember
- Riders must be 14-years-old or over
- Wear a protective helmet
- Park the electric scooter in designated parking lots (if any)
- Do not leave electric scooter in locations that obstruct traffic or pedestrians
- Solo riders only, no passengers allowed
- Do not drive outside designated lanes
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Origin
Dan Brown
Doubleday
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
THE BIO
Favourite place to go to in the UAE: The desert sand dunes, just after some rain
Who inspires you: Anybody with new and smart ideas, challenging questions, an open mind and a positive attitude
Where would you like to retire: Most probably in my home country, Hungary, but with frequent returns to the UAE
Favorite book: A book by Transilvanian author, Albert Wass, entitled ‘Sword and Reap’ (Kard es Kasza) - not really known internationally
Favourite subjects in school: Mathematics and science
Charlotte Gainsbourg
Rest
(Because Music)
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Dr Afridi's warning signs of digital addiction
Spending an excessive amount of time on the phone.
Neglecting personal, social, or academic responsibilities.
Losing interest in other activities or hobbies that were once enjoyed.
Having withdrawal symptoms like feeling anxious, restless, or upset when the technology is not available.
Experiencing sleep disturbances or changes in sleep patterns.
What are the guidelines?
Under 18 months: Avoid screen time altogether, except for video chatting with family.
Aged 18-24 months: If screens are introduced, it should be high-quality content watched with a caregiver to help the child understand what they are seeing.
Aged 2-5 years: Limit to one-hour per day of high-quality programming, with co-viewing whenever possible.
Aged 6-12 years: Set consistent limits on screen time to ensure it does not interfere with sleep, physical activity, or social interactions.
Teenagers: Encourage a balanced approach – screens should not replace sleep, exercise, or face-to-face socialisation.
Source: American Paediatric Association