The Oil & Gas Sector is one of the most strategic industries in the UAE. It a major contributor to the UAE’s national economy. The Oil and Gas sector requires a wide range of support systems ranging from equipment, oil field, oil rigs, logistics, transportation, labor, and more.
Oil and Gas Sector in Abu Dhabi
Abu Dhabi is one of the largest energy producers in the world. Abu Dhabi National Oil Company (ADNOC) is Abu Dhabi’s energy company. It has a network of 18 companies across the hydrocarbon value chain covering exploration, production, storage, refining, distribution, and development of petrochemicals. Its objective is to find new and innovative ways to maximize the value of the Emirate’s natural resources. Additionally, it looks to pioneer approaches and technologies to ensure that it meets the demands of the developing energy market.
Opportunities in the Oil and Gas Sector in Abu Dhabi
ADNOC has unveiled plans to invest around $45 billion in expanding its Ruwais petrochemical complex in Abu Dhabi`s Al Dhafra region. This will make it the largest integrated refinery and petrochemical complex in the world. It will also increase the range of ADNOC’s petrochemical and derivative products. Abu Dhabi has a new block licensing strategy. ADNOC has launched its first-ever competitive bid round for new licensing opportunities for the exploration, development, and production of oil and gas in the Emirate. Six blocks have been announced – two offshore and four onshore. This demonstrates the potential and opportunities. Should your company be doing business in Abu Dhabi? If so, how to start an oil and gas business in Abu Dhabi?
Setting up an Oil & Gas Company in Abu Dhabi
The Oil and Gas Company Setup in UAE is governed by few regulations from various Government Departments. The Supreme Petroleum Council has to approve the company to initiate any operations.
Steps in Setting up in Oil & gas Company in Abu Dhabi
- Initial consultation to understand the planned activities and to determine the legal structure
- Preparation of legal documents
- Application for Trade Name approval
- Arrangement of commercial lease
- Notarization of Memorandum of Association or Service Agent Agreement
- Application for Supreme Petroleum Council approval and Commercial License Issue
- Opening of corporate bank account
- Registration with the General Directorate of Residency and Foreign Affairs (GDRFA) and Ministry of Human Resources and Emiratization (MOHRE) to be able to provide visas for employees.
- Register the company with labor and immigration
Registering with the Supreme Petroleum Council
The Supreme Petroleum Council is responsible for Abu Dhabi’s petroleum industry. Any company operating in oil and gas and wanting to register with ADNOC for the supply of goods or services will need to have Supreme Petroleum Council approval. This approval isn’t just for drilling, tank cleaning, and pipeline maintenance companies; it is also necessary for companies providing ancillary goods and services such as pumps and valves, medical supplies, and consultancy services.
It is recommended that companies should apply for Supreme Petroleum Council approval during their incorporation process. The only documents required will be the work IDs of the local sponsor or service agent in addition to those generated for the company setup. The application is submitted via the Abu Dhabi Department of Economic Development (ADDED) and approval is usually received within 24-48 hours. The Supreme Petroleum Council does not charge a fee for its approval. However, beware of some organizations as they will try to charge massive fees for arranging this approval.
Activities Requiring Special Approvals
Business Activities requiring Special approval from Supreme Petroleum Council
- Employee Catering
- Equipment Trading
- And allied Oil & Gas related activities
All such companies have to get the Trade license with an additional activity ‘Onshore and Offshore Oil & Gas Field & Facilities Services”. For companies to access the oil field, there is another special request to be approved from the Critical Infrastructure and Coastal Protection Authority (CICPA).
Where to Set Up Your Business in Abu Dhabi- On Shore or Free Zone?
Oil and gas companies wanting to work directly with the ADNOC will require the Supreme Petroleum Council approval. Whilst this approval is possible via the Masdar free zone it comes with more conditions and fees. As such, oil and gas companies generally set up on onshore either as a Limited Liability Company or a Foreign Branch Office. Generally speaking, it is not possible for free zone businesses to receive Supreme Petroleum Council approval.
The main complexity for foreign investors wishing to set up an oil and gas business onshore in Abu Dhabi is the necessity to find a local partner. As with most countries in the GCC, UAE legislation states that a foreign investor cannot own more than 49% of any business entity in Abu Dhabi, and therefore at least one Emirati partner or UAE Owned Company must be a shareholder in the business, with ownership of at least 51%. As a company formation specialist, Riz and Mona Consultancy can act as the corporate local partner to the foreign investor, providing security and eliminating the requirement to source an individual Emirati stakeholder.
We Are Here for You
Setting up a huge project like that of a petroleum company takes a lot of planning and hard work, and you definitely need the right kind of support, especially during the initial yet crucial stage of the business registration and setup. Contact us to work with the right professionals to get your venture started in Abu Dhabi and anywhere in the UAE.