LONDON // Europe has two growth areas - the northern North Sea and the Black Sea - according to Gerhard Roiss, the chief executive of OMV, Austria's largest-listed integrated oil company.
OMV, part-owned by Abu Dhabi, last month spent US$2.6 billion buying stakes in two of Statoil's North Sea projects, underlining its intention to be in both these "growth areas". Meanwhile, ExxonMobil, the Texas-based oil giant, will spend $735 million drilling two deep-water oil wells off Ukraine's Black Sea coast.
Abu Dhabi-listed Taqa is also present in the North Sea as the operator of the Brent System Oil Pipeline, and it was the first new duty holder in the United Kingdom North Sea for 13 years.
It operates equity in seven fields and four operated platforms, mostly producing Brent crude oil. Various non-operated assets include pipelines and terminals and it has a 24 per cent equity in the Sullom Voe oil terminal.
It is true there have been some stellar finds in the northern North Sea in recent years but the bigger picture of North Sea oil and gas production is more complicated.
The oil industry has been pumping crude from the North Sea for 40 years but the most accessible oil and gas has nearly all gone. What remains is difficult, dangerous and expensive to extract.
As the industry goes through a remarkable period of investment, oil and gas production in the UK is actually on the decline and has been since the turn of the century.
This year ageing platforms will lie idle for longer than expected, awaiting maintenance and repairs.
According to a report by Oil & Gas UK, the body that represents the industry, output will average about 1.3 million barrels a day this year, compared with 1.54 million last year.
This would be the second-largest annual fall since the start of the North Sea's decline 13 years ago.
The figures have been published at a time when the industry was facing something of a renaissance, with record levels of investment being pumped into the UK continental shelf.
It had been hoped Britain would produce 2 million barrels a day by 2017, but that target is fading.
"This is a nasty dark cloud in the sky," says Malcolm Webb, the chief executive of Oil & Gas UK.
"But I'm convinced that it can be resolved. It takes the shine off the renaissance a little but it does not take away from the fact that you have all this investment in new projects."
Britain was the third-largest producer of gas and second-largest producer of oil in Europe last year, despite the 14.5 per cent decline in annual production to 567 million barrels of oil equivalent. Only Norway is a bigger oil and gas producer, with a 2.79 per cent share of world production, according to the International Energy Agency.
Large projects in the UK that have been approved recently include BP's $4.5bn Clair Ridge project and Statoil's $7bn Mariner heavy oilfield, the largest in the UK for more than a decade.
Clair Ridge, 75km to the west of the Shetland Islands off the coast of north-west Scotland, is expected to produce more than 640 million barrels of oil over 40 years. Platform jackets were installed safely this summer and production is on track to start in late 2016.
Oil industry experts have described it as a "monster" field containing an estimated 8 billion barrels of oil and some analysts believe oil produced there could enable the Atlantic to overtake the North Sea as the UK's biggest oil-producing region.
The Mariner field, about 150km east of the Shetland Isles, is being developed by the Norwegian firm Statoil, having gained consent from the UK government earlier this year.
Statoil expects to start production from Mariner in 2017 and the field is expected to produce for 30 years.
The average production is estimated at about 55,000 barrels of oil per day over the period from 2017 to 2020.
In April, Statoil said it could be sitting on 40 million to 150 million recoverable barrels of oil equivalent in the North Sea in its Gullfaks licence, where it is still working to confirm its findings. The Gullfaks find follows two other recent huge discoveries in the North Sea, in Norwegian waters - Johan Sverdrup field and King Lear. Statoil said last year its King Lear field could have between 70 million and 200 million barrels of oil equivalent.
Meanwhile, the problem for some of the British oil companies is that there have not been enough sizeable discoveries for a number of years.
Cairn Energy has had trouble repeating its success in India in Greenland and is now looking to explore off the coasts of Spain and Cyprus. Genel Energy, headed by the former BP chief executive Tony Hayward, is making great progress in Kurdistan.
But Morocco may turn out to be the sector's best chance this year. Genel Energy and Cairn will both drill wells in its Atlantic coast waters in the next few months.
The Falklands, in the southern hemisphere, still remains on the agenda for a handful of smaller British oil companies. Premier Oil said last month that it would begin further drilling in the southern hemisphere next year, in a move that is sure to antagonise Argentina again.
Finally, shale gas remains a significant but as yet undeveloped part of the jigsaw in Europe.
Poland and the UK are most vocal in wishing to copy the "revolution" that has occurred in the US, but other countries also have ambitions.
The US oil company Chevron last week won a tender to explore for shale gas in western Lithuania, which neighbours northern Poland.
If the European oil sector has its hands full, there are plenty of other international oil majors who are willing to take a look - whether the exploration is onshore or offshore.
business@thenational.ae
MATCH INFO
Kolkata Knight Riders 245/6 (20 ovs)
Kings XI Punjab 214/8 (20 ovs)
Kolkata won by 31 runs
Ms Yang's top tips for parents new to the UAE
- Join parent networks
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- Keep an open mind
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
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Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
Where to buy
Limited-edition art prints of The Sofa Series: Sultani can be acquired from Reem El Mutwalli at www.reemelmutwalli.com
Spider-Man%202
%3Cp%3E%3Cstrong%3EDeveloper%3A%3C%2Fstrong%3E%20Insomniac%20Games%0D%3Cbr%3E%3Cstrong%3EPublisher%3A%3C%2Fstrong%3E%20%20Sony%20Interactive%20Entertainment%0D%3Cbr%3E%3Cstrong%3EConsole%3A%20%3C%2Fstrong%3EPlayStation%205%0D%3Cbr%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%205%2F5%3C%2Fp%3E%0A
French Touch
Carla Bruni
(Verve)
Royal wedding inspired menu
Ginger, citrus and orange blossom iced tea
Avocado ranch dip with crudites
Cucumber, smoked salmon and cream cheese mini club sandwiches
Elderflower and lemon syllabub meringue
Essentials
The flights
Emirates and Etihad fly direct from the UAE to Geneva from Dh2,845 return, including taxes. The flight takes 6 hours.
The package
Clinique La Prairie offers a variety of programmes. A six-night Master Detox costs from 14,900 Swiss francs (Dh57,655), including all food, accommodation and a set schedule of medical consultations and spa treatments.
Where to donate in the UAE
The Emirates Charity Portal
You can donate to several registered charities through a “donation catalogue”. The use of the donation is quite specific, such as buying a fan for a poor family in Niger for Dh130.
The General Authority of Islamic Affairs & Endowments
The site has an e-donation service accepting debit card, credit card or e-Dirham, an electronic payment tool developed by the Ministry of Finance and First Abu Dhabi Bank.
Al Noor Special Needs Centre
You can donate online or order Smiles n’ Stuff products handcrafted by Al Noor students. The centre publishes a wish list of extras needed, starting at Dh500.
Beit Al Khair Society
Beit Al Khair Society has the motto “From – and to – the UAE,” with donations going towards the neediest in the country. Its website has a list of physical donation sites, but people can also contribute money by SMS, bank transfer and through the hotline 800-22554.
Dar Al Ber Society
Dar Al Ber Society, which has charity projects in 39 countries, accept cash payments, money transfers or SMS donations. Its donation hotline is 800-79.
Dubai Cares
Dubai Cares provides several options for individuals and companies to donate, including online, through banks, at retail outlets, via phone and by purchasing Dubai Cares branded merchandise. It is currently running a campaign called Bookings 2030, which allows people to help change the future of six underprivileged children and young people.
Emirates Airline Foundation
Those who travel on Emirates have undoubtedly seen the little donation envelopes in the seat pockets. But the foundation also accepts donations online and in the form of Skywards Miles. Donated miles are used to sponsor travel for doctors, surgeons, engineers and other professionals volunteering on humanitarian missions around the world.
Emirates Red Crescent
On the Emirates Red Crescent website you can choose between 35 different purposes for your donation, such as providing food for fasters, supporting debtors and contributing to a refugee women fund. It also has a list of bank accounts for each donation type.
Gulf for Good
Gulf for Good raises funds for partner charity projects through challenges, like climbing Kilimanjaro and cycling through Thailand. This year’s projects are in partnership with Street Child Nepal, Larchfield Kids, the Foundation for African Empowerment and SOS Children's Villages. Since 2001, the organisation has raised more than $3.5 million (Dh12.8m) in support of over 50 children’s charities.
Noor Dubai Foundation
Sheikh Mohammed bin Rashid Al Maktoum launched the Noor Dubai Foundation a decade ago with the aim of eliminating all forms of preventable blindness globally. You can donate Dh50 to support mobile eye camps by texting the word “Noor” to 4565 (Etisalat) or 4849 (du).
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NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
How to get there
Emirates (www.emirates.com) flies directly to Hanoi, Vietnam, with fares starting from around Dh2,725 return, while Etihad (www.etihad.com) fares cost about Dh2,213 return with a stop. Chuong is 25 kilometres south of Hanoi.
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
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.”
