Abu Dhabi: The impact of falling oil prices is minimal in the UAE and Saudi Arabia especially for national oil companies, which are expected to be able to secure better deals at this period of time, according the latest study by Alix Partners, an advisory firm.
In a media roundtable event yesterday, Louis Besland, managing director at Alix Partners, said he expected to see a 20 per cent drop in investments by oil companies around the world this year as a result of tumbling oil prices.
However, this did not apply to the region. While some investments might be put on a halt, the UAE’s national oil companies are still expected to make “good money” at current prices and continue to invest.
“There might be adjustments but not major changes like other countries. The suppliers will get a hit but not the national oil companies,” Besland said.
Pressure
“The service industry that is servicing the oil and gas industry, I think, will face a lot of pressure in reducing their cost and being more efficient, and in some cases, those who are exposed outside the region might even have to reduce their size because of the slowdown in the rest of the world.
For the national oil and gas players, I think they can take advantage of the market situation,” he told Gulf News.
Besland said that should oil prices remain at their current levels, oil companies should work on cutting their costs, pushing down their breakeven costs, and raise their efficiency.
“In the larger oil and gas companies, we see a bit of cautious move in the way they hire, but we will not see layoffs or even a salary freeze [in the UAE],” he said.
He added that the UAE and Saudi Arabia in particular were very low risk markets, which meant that international investors will still be looking at both countries to invest and expand. This is boosted by the fact that production costs in the region are lower than those in other regions such as the North Sea.
