100% corporate "foreignization", localisation and taxation stirs the Middle East mix as Net Zero and Petroleum Technology gear up in the region

The announcement in December of last year that the United Arab Emirates was removing the requirement to have a 51% local registered shareholder in onshore limited liability companies has raised the interest of clients and connections who either have existing businesses in Abu Dhabi or who are looking to establish there in 2021. The regulations build on Foreign Investment Laws of 2018 which amended the UAE Commercial Companies Law of 2015 and a system that had been in place since 1984.

So what is happening? The reality is ‘not very much’ for the energy sector in the short term: of the 122 business activities listed in the 2020 regulations which are now eligible for 100% ownership only the manufacture of floating and submersible drilling platforms and other floating structures (which would include floating offshore wind platforms) are included in the “positive list” and exploration and production of petroleum is expressly on the “negative list" set down in 2018. “Manufacture” does not include “maintenance and repair” of these structures. In terms of permitted services activities only “pollution treatment and environmental protection” appears to be applicable to the energy sector. However, the momentum is there and “freedom of ownership” is increasingly being seen as the quid pro quo for greater burdens from localisation and taxation reforms.

HFI is rolling out its DMCC+ Plus Corporate & Compliance Solutions service and this has now been expanded to cover Abu Dhabi, Saudi Arabia, Qatar, Oman, Kuwait and Iraq including foreign ownership consultancy with a full team of new and long-established local partners now firmly in place to support the HFI team.

I will be speaking on the subject of 100% corporate “foreignization” in the region at EIC Connect Virtual Clean Energy UAE which is being held on 23/24 February and, meanwhile, my thanks go out to Hussain Lootah Law Office in the UAE who will be supporting us to monitor the details on the new legislation as it is rolled out and to Khalid Al Qubaisi of Al Yaseah Group in Abu Dhabi who is serving as a sounding board on the impacts on local partner agreements, ADNOC procurement and ICV localisation.   

HFI Net Zero Legal Solutions is sponsoring EIC Connect – Clean Energy UAE 2021 this month. Abu Dhabi is home to the International Renewable Energy Agency (IRENA) and Mubadala-owned MASDAR Future Energy Company and the event will bring together leading national operators, EPC contractors, developers and OEMs to learn about opportunities across the entire energy sector in the UAE

The UAE government aims to invest US$160 billion by 2050 to meet the growing energy demand and ensure sustainable growth for the country’s economy. This is a key aspect of the UAE Energy Strategy 2050 energy mix that aims to achieve the following mix of power sources - 44% renewables, 38% gas, 12% clean coal and 6% nuclear.

Solar and wind projects have already established the region’s renewables and clean energy credentials and, with three major carbon capture and storage projects now rolling out in Abu Dhabi, Saudi Arabia and Qatar as tracked by the Global Carbon Capture and Storage Institute 2020 annual report, and recent announcements on major hydrogen-focussed projects, HFI is aiming to be at the net zero leading edge in the region as we all adapt to the energy transition. We will shortly be announcing a new team of Net Zero specialists to support projects in the region. We would highly recommend EIC’s Datastream service for monitoring the rise of renewables and clean energy projects and opportunities, and we are delighted to bring your attention to the “Building Momentum for CCS in the Gulf Region and Around the Globe” webinar being hosted by the Global CCS Institute on 23 February – registration details are available here.

HFI Petroleum Technology Legal Solutions  continues to grow with the recent completion of two client projects in Saudi Arabia. We see a continuing hunger for new advanced petroleum technology in the Middle East region as the huge NOC exploration and production companies – Aramco, ADNOC, KOC, Qatar Petroleum and PDO – all grapple with the challenges associated with production maximisation, efficiency, cost reduction and environmental challenges.

We look forward to the SPE/ICoTA Well Intervention Conference and Exhibition which is going virtual 22–25 March 2021, the return of the Offshore Well Intervention (OWI) Middle East & North Africa (MENA) conference on 25 and 26 May in Dubai and, of course, the return of ADIPEC on 15-18 November in Abu Dhabi.

To discuss how we can assist with your ventures in the Middle East Region and across the UAE  email me, call me or link with me.

Best Regards.

Hugh Fraser

Managing Partner