The joint venture launched by Abu Dhabi's government investment arm Mubadala and energy firm Petrofac is the latest move by Abu Dhabi to diversify and develop its economy.
On September 1, Mubadala announced that it would be forming a partnership with UK-based Petrofac. The joint venture will create a new energy entity in the United Arab Emirates (UAE) focused on international oil and gas facility development.
"We plan to have a world-class engineering centre in Abu Dhabi with several hundred full-time staff within the next few years," said Rajesh Verma, executive vice president of Petrofac's engineering and construction division, told the international press.
Petrofac has also chosen to set up its regional headquarters in Sharjah and launched last week a state-of-the-art training centre in Dubai to meet the safety and technical needs of the energy industries throughout the Middle East. It is also rumoured to be bidding for the extension of three oilfields in Abu Dhabi.
Petrofac officials expect the new firm to become an international contractor competing with major global firms in the field of both onshore oil and gas developments. To this end, they are planning to design and build large structures such as refineries and drilling platforms. The entity, however, will not be involved in oil extraction or sale and manufacturing of specialist equipment.
The venture represents an important milestone in the development of the Emirate's energy sector. While the Abu Dhabi National Oil Company (ADNOC) runs most of the key upstream and downstream oil and gas activities in Abu Dhabi, it usually contracts construction work out to foreign companies such as Petrofac. According to Mubadala, relatively few UAE firms are involved in contracting, with the exception of Jaber Energy Services, Lootah BCGas and Subtec Middle East.
Mubadala's aims are to drive the diversification of Abu Dhabi's economy and ensure long-term investments are made in sectors that will support the Emirate's economic growth in the future. The Petrofac deal certainly fits this brief. The new company will be active outside the Emirate's borders, and therefore not solely reliant on the local economy. Furthermore, it aims to capitalise on high global demand for hydrocarbon extraction services. Driven by high oil prices and rising demand, many producers are seeking to increase their output capacity, and the combination of Petrofac's expertise and Mubadala's capital, with experience garnered from Abu Dhabi's own oil industry, has the potential to create a powerful new commpetitor for global hydrocarbon development contracts.
"The establishment of this joint venture also furthers the diversification of Abu Dhabi in the energy sector and will contribute to ensuring the future sustainability of a very important industry through investment in local capabilities and human resources," Ibrahim Al Ansari, the chairman of Mubadala Petroleum Services Company, told the local press.
The new firm will compete with major contractors such as Italy's Saipem, Spanish firm Tecnicas Reunidas and France-based Technip, which are all active in the Gulf.