The Oil & Gas Sector is one of the most strategic industries in the UAE. It is a major contributor to the UAE’s national economy. Oil and Gas Trading Licenses in UAE can be obtained from two major business jurisdictions, the Mainland and Free Zone.
It is a very regulated and strategic business sector that is governed by the UAE’s Energy Ministry. Obtaining an Oil & Gas Trading License in UAE requires many pre-approvals from various Government Agencies to sanction the clearance.
The sector requires heavy investments and the business operations are being overseen by the UAE Government. Oil & Gas sector is a great contributor to the overall GDP of UAE as well as supports the growth of numerous industry sectors.
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 go 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. There are 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. They have most of the Oil exploration, rigging, refining, etc. Also, 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 container transfers, storage arrangements, and 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 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”
It is also necessary to obtain approval from CICPA (Critical Infrastructure and Coastal Protection Authority) before companies can access the oil field.
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 a 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 the Branch.
Additionally, the Foreign Branch Company is required to have a partnership agreement with an Emirati or corporate partner (51% ownership).
Crude Oil Trading License in UAE
A crude Oil Trading License in UAE is a mandatory requirement for any investor to conduct trading in Oil and Gas products. Also, there are only a few Free Trade Zones in UAE that are authorized to provide the Crude Oil Trading License in the UAE.
Depending on the business requirement, and exact business activities, the investors can choose the respective business jurisdictions. For Crude Oil Trading, there are certain pre-approvals required from the Ministry of Energy.
AURION’s expert Business Consultants will coordinate with Government agencies, Free Trade Zones, and Semi-Governmental bodies to expedite the Crude Oil Trading License process.
Setting Up a Crude Oil Trading Company in Hamriyah Free Zone
Hamriyah Free Zone is a favorable choice for investors looking to venture into 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
In a Free Zone company, foreign investors can own 100% of the company. 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
There is good connectivity between the Free Zone and the rest of the UAE as well as neighboring countries including Oman, Bahrain, and others. 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.
Oil and Gas Equipment Trading License in UAE
The Oil and Gas sector requires a wide range of support systems ranging from equipment, oil field, oil rigs, logistics, transportation, labor, and more. There is an immense demand from the Oil and Gas companies in the region for a trusted supplier of heavy machinery and equipment for their business operations.
An oil and Gas Equipment Trading License in UAE is required for a company to supply heavy machinery to the oil field, rigs, seaports, processing centers, etc., for conducting various business operations. The investors can obtain the Oil and Gas Equipment Trading License in UAE at a cost of AED 20,000 from the mainland of UAE.
Depending on the visa quota required, warehouse space availability, special approvals, and clearances, the company setup cost will vary. AURION’s team of Business Consultants will offer investors the right company setup package. The team will guide them throughout the process of obtaining the Oil & Gas Equipment Trading License in the UAE.
To know more about the procedures of opening an Oil and Gas Equipment Trading Company in the UAE, talk to our experts right away!
Contact: Aurion Business Consultants