National oil companies in the region are likely to buck the trend of slower investment in the industry, a study shows.
The report was based on a survey the consultants Alix Partners commissioned from Oxford Economics, which was conducted with 250 board level executives in oil, gas and petrochemicals companies as oil prices were falling rapidly at the end of last year. It found that while capital expenditure had been rising by an average of 12 per cent a year from 2010 through last year, the return on capital employed had been decreasing by 14 per cent for the larger integrated oil and gas companies in recent years.
There were a variety of reasons behind the declining returns, including cost inflation in the industry, and Alix Partners wanted to understand what companies were doing to address it – particularly how they would react to the sharp decline in oil prices, according to Louis Besland, Alix Partners’ Abu Dhabi-based head of energy in the Middle East.
“We found that the levers used when faced with this negative trend was to try to produce more from less, basically – already we have seen a reduction of 70,000 in the workforce worldwide, reduced capex of 20 per cent on average, postponing and cancelling some projects,” Mr Besland said. But, he added: “That doesn’t apply that much to the region. Some projects might be postponed but what we see is that the region might take advantage of the situation because they are looking longer term.”
He said NOCs have a mission to develop the economies and are not under the same short-term pressures as IOCs, to pay dividends for example. “They still make good money at US$50-$60 a barrel and we see them continuing to invest and maybe even increase investment,” he added.
Mr Besland noted a recent report that Saudi Aramco was looking to hire US workers with experience of developing shale oil and gasfields who have lost their jobs.
“Adnoc might take advantage of a supplier market that is eager to get projects in this environment,” said Mr Besland. “There were a lot of projects signed here in 2008-09 during the downturn and they managed to get very good deals with Korean and other suppliers.”
amcauley@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.
The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
