Kuwait Energy buys Oil Search unit for $200m as part of expansion plan

Kuwait Energy Company has completed its US$200 million (Dh734m) acquisition of the Middle East and North Africa unit of Oil Search, the latest in a series of purchases ahead of a planned public share offering next year.

As part of the sale, Oil Search, a company based in Papua New Guinea, gives Kuwait Energy stakes in five oil and gas exploration blocks offshore Yemen and three in Egypt. The company has a growing portfolio of global energy assets, which includes producing properties in Yemen, Oman and Ukraine. The latest deal is helping to restore its planned geographical focus on the Middle East and North Africa, as well as central and east Asia.

Kuwait Energy said it planned to spend $100m in Yemen this year, and that its chairman, Manssour Aboukhamseen, had met Yemeni officials to discuss work programmes. Kuwait Energy, a privately held company based in Kuwait City, last week signed an agreement with Somalia's transitional government and an Indonesian company, Medco Energy International, to establish and govern the activities of a Somalian state oil company, Somalia Petroleum Corporation.

The government said the agreement followed Somalia's adoption of a new petroleum law earlier this month and would provide the basis for developing an oil and gas industry in the country. Under terms of the deal, the government would own 51 per cent of Somalia Petroleum, with Kuwait Energy and Medco each holding 24.5 per cent. Somalia, which has been racked by civil war, has been without a fully functioning central government since 1991. This has held back the east African nation's hopes of developing its natural resources to generate revenue.

"We hope this collaboration will not only generate income for Somalia, but will also assist in building the infrastructure of the country," said Sara Akbar, the chief executive of Kuwait Energy. Kuwait Energy also joined up with Polski Koncern Naftowy Orlen, a Polish refining group, in April to acquire stakes in two Latvian offshore oil exploration prospects. That transaction followed its acquisition in February of exploration assets in Pakistan and of the Ukrainian assets of Cardinal Resources, a UK gas producer, last December.

Last October, Kuwait Energy signed a letter of intent with Abu Dhabi National Energy Company, or Taqa, to pursue oil and gas investment opportunities in Egypt, Oman, Yemen, Syria, Iraq, Kazakhstan and Iran. This June, Kuwait Energy said it planned to seek a listing on the London Stock Exchange and to sell a 25 per cent stake in the company in the initial public offering scheduled for next year. Kuwait Energy was formed in 2005. Last year it had net profits of five million Kuwaiti dinars (Dh69.2m), up from 281,000 dinars in 2006.

Last year the company's oil and gas production averaged 4,630 barrels of oil equivalent a day (boed), mainly from Oman and the Ukraine, compared to 1,971 boed in the previous year. Since last year, it has increased its oil and gas output to around 7,000 boed. tcarlisle@thenational.ae

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What the law says

Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.

“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.

“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”

If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.

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