x Abu Dhabi, UAEWednesday 26 July 2017

Gulf 'should demand stakes'

Gulf nations should demand stakes in the oil companies they host or push for seats on their boards, says a Qatari government adviser.

RAS AL KHAIMAH // Gulf nations should demand stakes in the multinational oil companies they host or push for seats on their boards, says a Qatari government adviser. Middle East sovereign wealth funds "should aggressively take stakes in the companies from the West and the East" that are active in the Gulf's oil, gas and petrochemicals sectors, said Tidu Maini, a leading adviser on economic development to the Qatar government.

They should also "insist on board representation in exchange", Mr Maini said, to ensure a convergence of interest between foreign businesses, state-owned companies and governments in the Gulf. Mr Maini, the executive chairman of the Qatar Science and Technology Park, was speaking at the Global Arab Business Meeting where he was named one of three Arab Business Leaders of the Year. The event was co-sponsored by the Ras Al Khaimah Investment Authority and the Swissthink tank Horasis.

Mr Maini questioned the failure of the biggest oil companies, such as the US-based ExxonMobil and the Anglo-Dutch group Royal Dutch Shell, to appoint directors from the Middle East oil and gas exporting countries on which their businesses depend. In Qatar, those two companies have been the major partners of the national oil and gas company Qatar Petroleum in strategic projects to exploit the nation's vast gas resources.

The developments include the world's biggest natural gas liquefaction facilities and its biggest gas-to-liquids project. The former produces liquefied natural gas, the super-chilled fuel that can be loaded on to tankers for export around the world. The latter converts natural gas into ultra-clean equivalents of oil-based transport fuels such as petrol and diesel. Qatar is now the acknowledged world leader in both areas.

International oil companies "need to open up their boards" to representation from their Gulf partners, Mr Maini said, "or they are never going to understand the aspirations of the region … It's very important that we start coupling." Like Qatar, the UAE has based the development of its oil and gas sector on joint ventures. The most prominent are between state-owned entities such as Abu Dhabi National Oil Company (ADNOC) and foreign partners including the major US and European-based companies.

The five largest, ExxonMobil, Shell, BP, Total and Chevron, are partners in concessions established in the 1930s to exploit some of Abu Dhabi's biggest oilfields. Those contracts will expire within the next few years - in 2014 for the onshore concessions and 2018 for offshore. The Government of Abu Dhabi has yet to announce on what terms they will be renewed. Partnerships involving equity investments by sovereign wealth funds have already been tested in the emirate's petrochemicals sector. The Abu Dhabi Government-owned International Petroleum Investment Company holds a 20 per cent stake in the Austrian petroleum group OMV, with which it owns the Vienna-based petrochemicals company Borealis.

Borealis, in turn, is ADNOC's partner in Borouge, the developer of one of Abu Dhabi's two biggest petrochemicals complexes. On Monday, Borouge announced it had established a marketing and sales company in Beijing, strengthening its presence in China. China, which recently overtook Japan as the world's second-biggest economy, is the fastest growing market for polythene and other widely used plastics produced by Borouge. The other two business leaders honoured at the Global Arab Business Meeting were Naif al Mutawa, the Kuwaiti creator of The 99 comics, and Mohammed el Mandjra, the chief executive of the Moroccan telecommunications company Meditel.

tcarlisle@thenational.ae