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.
Why the Oil & Gas Sector is Important for UAE?
The Oil & Gas Sector in UAE is of great strategic importance and is a key business activity that significantly contributes to the economic growth of UAE.
Though UAE is focusing on the active diversification of the national economy into non-oil trade and business activities. The dependence on Oil and Gas sector will always be on the higher side.
The revenue from Oil & Gas sectors are actively invested in other industry sectors such as tourism, trade, agriculture, manufacturing industry, etc.
The sector acts as backend support to develop an infrastructure in UAE that will attract more foreign investors.
Oil and Gas Production Infrastructure in UAE
There is a large support system for the Oil and Gas Production setup in the UAE. It includes allied sectors like the oil extraction units, a system of pipelines, refineries, port terminals, etc.
The Gas pipeline network is a major system through which the gas is transported to nearby countries.
Natural Gas Production in UAE
Natural gas is the main resource for electricity production. Also, as the domestic electricity consumption increases the volumes of natural gas production goes up.
For a constant production of Natural Gas, a stable economy and growing populations are key drivers.
The infrastructure facilities in UAE for the production of Natural Gas are top-notch and there is a lot of subcontracting opportunities for private companies.
Where to Set Up Oil & Gas Companies in UAE?
In UAE, Oil & Gas Companies are mostly set up in Abu Dhabi as most of the Oil exploration, rigging, refining, etc., as well as the production of Natural Gas, is focused around the region.
The second favorable choice is Sharjah as the Hamriyah Port, Khalid Port, and Khorfakkan Port facilitate oil containers transfers, storage arrangements, transportation to the rest of the world.
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
- Finalize the legal form and exact business activities
- Register the trade name and obtain the initial approval
- Arrange an office lease
- Apply for a trade license and get the required approvals
- Obtain the Trade License from the Department of Economic Development Abu Dhabi
- Register the company with labor and immigration
- Open a corporate bank account
- Apply for employee visas
Special Approvals Required for Setting Up Oil & Gas Companies
The Supreme Petroleum Council is the governing body for regulating the Petroleum sector in Abu Dhabi. It is a Government Entity created for formulating and overseeing the successful implementation of the Emirate’s petroleum policy.
The Supreme Petroleum Council Approval (SPC Approval) is required for all Oil and Gas companies. Companies in the oil & gas sector operating in the following activities and beyond would require the approval to start working in UAE.
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).
On-Shore Registration for setting Up Oil & Gas Companies
For Oil and Gas companies, the ideal option is to form an LLC Company in the mainland of Abu Dhabi (Advisable Option) or as a Foreign Branch.
The company then has to obtain special approval from the Supreme Petroleum Council.
Setting Up a Foreign Company Branch
For Foreign Branch Company, the setup process could be slightly tiring as it requires document clearance from the embassy in the home country. Also, the parent company must be having the same trade name and business activity as of the Branch.
The Foreign Branch Company must also have a partnership arrangement with a UAE local (51% share owned by Emirati/Corporate) and the rest will be owned by the company.
Crude Oil Trading in UAE – Setting Up a Crude Oil Trading Company in Hamriyah Free Zone
Hamriyah Free Zone is a favorable choice for investors looking to venture into the Crude Oil Trading in UAE due to various business benefits.
The 100% Ownership of the company is a major attraction, followed by favorable taxation policies, then the logistics infrastructure offered by the Free Zone.
1. 100% Foreign Ownership & Tax-Free Jurisdiction
Free Zone company can be 100% owned by a foreign investor. They have 100% control over the company’s operations and are also eligible for 100% profit repatriation and capital transfers.
Also, there is a 0% corporate and income tax. Being a free zone there is no customs duty on imports and re-exports.
2. Easy Company Setup Process & Lower Setup Cost
The company setup process in Hamriyah Free Zone is straightforward and easy for investors to obtain their trade license.
However, they have to get the required approvals from the respective Government departments and Free Zone Authorities to start a Crude Oil Trading company.
The Free Zone has multiple packages based on the visa quota required, multi-year license, office types, etc. Investors can choose from a variety of options and form the company according to their requirements.
3. Logistics & operations
The Free Zone is well connected with the rest of UAE and neighboring countries like Oman, Bahrain, and beyond. The proximity to Hamriyah Port and other major Seaports of UAE, make it a gateway to the world.
Also, it opens up new business opportunities and provides the operational infrastructure, logistics support, Storage facilities, and easy shipment to the rest of the world.
To know more about the procedures of opening an Oil & Gas Company in UAE, talk to our experts right away!
Contact: Aurion Business Consultants