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Inside Saudi Arabia’s water PPP ecosystem

Saudi Arabia’s water PPP market has grown into one of the most structured and well-governed sectors for global developers, underpinned by institutional reforms, legal frameworks and digital tools that have systematically reduced the barriers to market entry.

By SHARAKAT

Structure

United Oil was established just a decade ago and is already one of Syria’s leading oil and gas companies.

The company is a subsidiary of Damascus-headquartered Anwar Akkad Sons Group, a conglomerate with interests in several sectors, including information technology, medical products and food and drink manufacturing.

The group grew out of a textiles company founded by local businessman Anwar Akkad in 1935 and was registered as a limited liability company in 1984. It is now owned by three sons of the late Anwar Akkad: Hashim Akkad, Abdul Kareem Akkad and Mohammed Samer Akkad.

United Oil has the highest profile among the companies owned by the group. It specialises in the drilling of oil and gas wells and work-over and well completion services.

The company provides a range of services, including mud engineering; casing and tube make up; drilling operations and drilling management; cementing and drill completion; rig maintenance; and equipment supply. It operates both as a subcontractor and on a turnkey basis.

In addition to its headquarters in Damascus, United Oil has an office in Iraq, which was set up when it began drilling activities there in 2002. In early 2009, it opened a new office in Egypt. United Oil is an accredited member of the Houston-based International Association of Drilling Contractors. The firm employs 529 staff, including 18 managers, five consultants and 20 drilling engineers.

Operations

United Oil is currently active in two markets: Iraq and Egypt. The company was one of few oil firms working in Iraq in the immediate aftermath of the US-led invasion of the country in 2003. It stopped work for just six months due to the conflict, a short period compared with most companies in the industry.

United Oil began work in Iraq, when it was awarded a drilling contract by the government-run South Oil Company (SOC). The turnkey project, involving 30 development wells in the West Qurna field in Basra province, was completed in 2006.

The company started a second turnkey project for SOC in 2009, comprising 15 development wells on the Tuba oil field, also in Basra. Of the total, 11 wells have now been completed, and all are producing. A 12th well is currently being drilled, and the remaining three will be completed by the end of 2010.

In 2007, United Oil won its first contract as a developer in Egypt, with the award of a concession contract by Ganoub el-Wadi Petroleum Holding Company (Ganope), the state-owned oil company responsible for hydrocarbons development in the south of the country.

The exploration and production (E&P) concession covers the 139-square-kilometre block 2 on the North East Esh el-Malaha field in the eastern desert.

Work on the concession began in 2008, and the company has now completed seismic surveys and seismic processing, which were carried out by a third party. Site selection is under way for the first well, which is expected to be drilled in the first half of 2011.

In the exploration phase, the investment risk is carried by United Oil, but if oil is found in commercially viable quantities, the company will form a production sharing partnership with Ganope, in which it will be the minority partner.

United Oil owns two rigs, both of which are currently operating in Iraq. The firm is in the final stages of agreeing a deal to purchase two more rigs from China.

Ambitions

United Oil says it aims to be one of the world’s most efficient and high value-added providers of drilling and associated services. It also plans to be a reliable and committed provider of drilling management services and says it hopes to do this through the recruitment and training of home-grown personnel.

In more concrete terms, the company’s ambitions revolve around a continued strong presence in Iraq, where it is bidding for further work, and the development of a business in Syria, where it has also recently begun to compete for contracts.

In Egypt, it aims to successfully complete drilling on the Esh el-Malaha field and the eventual production and sale of its first oil as a developer.

United Oil is also planning to bid for work as a developer in new markets, including Syria, Libya and Sudan, where it is in negotiations for contracts.