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Risk and reward in the Middle East

Oilfield Technology,


Extensive oil reserves, major construction projects, sophisticated engineering requirements and a growing consumer market make the Middle East a major opportunity for numerous energy firms looking to expand internationally. However, with political instability, terrorism and the ongoing unrest of the 'Arab Spring' it can be a daunting place for firms looking to work overseas. Nonetheless, companies, including the numerous specialist engineering and service companies working in the sector, can overcome the risks and find themselves doing business in a highly rewarding market with few competitors – so long as they take suitable steps towards protecting their interests.

Terrorism

The Middle East has spawned numerous well known terrorist organisations and attacks remain a highly feared risk no company would ever want to deal with. However, the perception of risk posed by the issue often exceeds the reality and the likelihood of a company actually being caught up in a terrorist incident is relatively low. Even in Iraq – which arguably remains the most violent of countries in the region – many firms which employ sufficient security measures are reaping the benefits of trade in the country’s oil rich regions where numerous exploration and construction projects are underway.

Road Traffic Accident

Statistics may offer a degree of re-assurance. In spite of the magnitude of risks such as terrorism, company employees are far more likely to experience a car accident or medical problem when working in the region. Anecdotal evidence suggests that one of the most common causes of death amongst foreign personnel in Iraq is heart attack. The rate of car accident is also particularly high in countries such as Egypt, Lebanon and even the otherwise tranquil United Arab Emirates. These are hardly issues with which we are unfamiliar in the UK.

Civil Unrest and the ‘Arab Spring’

The threat posed by groups such as al-Qaeda has also been partially eclipsed by the tide of civil unrest associated with the 'Arab Spring'. Many terrorist organisations in the Middle East had for years used government repression as a means of gaining support. By criticising corrupt regimes they were able to generate sympathy for their movement amongst the civilian population. With the removal of some of these governments, not by terrorist action, but by sheer people power, organisations such as al-Qaeda have been shown up as somewhat irrelevant.

However, the overthrow of governments in itself has lead to major concerns for investors. Mass demonstrations in Cairo and Manama, months of fighting in Libya and ongoing violence in Syria and Yemen continue to pose a major operational consideration for foreign companies caught up in the turmoil. Yet even here firms have been able to carry on working.

Lessons from Libya

In Libya a pattern is emerging as companies look to return to the country. Those which invested in communities and employed local nationals around their company operations are increasingly finding that much of their property remains intact and in many cases was maintained throughout the crisis. Such acts of loyalty have saved significant amounts of money and highlight perhaps one of the most important lessons in risk mitigation: support from your local community can be your strongest form of security. It can empower a community, maintain their interest in protecting your assets and even act as protection against hostile government legislative action.

Community Protection

Such a universal principle should be familiar amongst companies involved in the energy sector, many of which already spend resources on community enhancement in places such as Houston, Aberdeen and Oslo. By taking as much care of the communities in areas of exploration and production as in the hinterland of a head office a company will significantly reduce the risk of harm to its personnel and property. The Middle East region may seem hazardous and beset with risks, but it also hospitable, community-orientated and rich in economic opportunities and potential business partners. By taking a business approach that respects and engages local residents in an area of operations a company can significantly increase its chances of capitalising on those opportunities without compromising safety – or profit margins.

Author:

John Drake is the head of Global Intake – a travel safety and risk analysis website maintained by the intelligence department of AKE. You can follow him on twitter at www.twitter.com/johnfdrake and you can find out more about Global Intake at http://www.globalintake.com

Read the article online at: https://www.oilfieldtechnology.com/exploration/03042012/ake-examine-the-risks-and-rewards-of-working-in-the-middle-east/

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