Dr. Peter Gopfrich – CEO, German-Emirati Joint Council for Industry and Commerce (AHK), United Arab Emirates
The director of the German-Emirati Joint Council for Industry and Commerce (AHK), Dr. Peter Gopfrich, explains how German companies are playing a role in the UAE’s oil & gas industry, the future role of German companies in the UAE and why investors should look to the UAE for business opportunities.
What have been the organization’s largest challenges over the last year?
This last year, the challenge has been to advise German companies on how to adjust to a changing environment, especially since the price of oil has dropped. This of course has clear repercussions on not only economic development but on the priorities of the country here and also on the business perspective of Germany. Oil and gas is not a traditional business in Germany because we don’t have a major oil company except Wintershall, which is relatively small in comparison to other large international oil companies. In the oil and gas industry Germany is involved mainly in supply, delivery and engineering. In addition, one of the major challenges we see is with EPS [Engineering Procurement Construction] projects where German companies traditionally held a strong foothold in the market. To counteract economic-political issues related to EPS projects, staff members of the AHK were given dual-intensive studies to understand the EPC business in the Gulf region to understand how Germans can compete and learn from newer players in the local Emirati market.
How are Germans remaining competitive in the UAE’s oil & gas sector?
The UAE has a great deal of new players from Asia, like the Koreans and the Chinese who are buying oil and not just trying to sell it. They possess political backing, as well as a long-term strategy because many EPC contractors have steady relations with suppliers or subcontractors from their homeland. This translates into Germans having fewer opportunities to play a role in the development of the oil & gas industry in the UAE by collaborating with the new powerhouses who have come to the region. Consequently, we have created a delegation to solicit projects in the UAE internationally. Our international committees have held discussions to analyze and discuss how clients in the industry can understand the value of working with German companies that offer the best service and quality at sometimes-steeper prices.
Over the last couple of years, the AHK has aimed to transfer German technology to the UAE in multiple sectors, including oil and gas. Many medium-size German companies are coming to understand the value of having a proactive attitude in light of current market conditions. Moreover, our role is also to help German businesses understand the local market, especially in sectors that Germans excel, at such as EPC contracting.
How many of your members are involved in the oil and gas industry?
Our members in Dubai and Abu Dhabi have independently unique interests. Our members in Dubai have a more broad focus and sometimes conduct their regional operations from here versus our Abu Dhabi clients who have a more oil & gas-centric business. Overall, Germany plays a major role here in the automotive industry but only about 10 percent are clearly dedicated to the oil & gas sector. For example, Siemens and Wintershall participate in various sectors of the value chain, yet it is hard to measure the amount of their involvement in the local market, but if you take into account sub-suppliers we might have around 20 percent of our members involved in the industry in some capacity.
What opportunities do you see for German oil companies looking to do business in the UAE?
This is a question we have been considering, but I cannot give you an answer because of current oil price conditions. I believe Abu Dhabi is apprehensive that many projects might be shelved like in Qatar, but it is important to note that Abu Dhabi is still an optimistic place to do business and the AHK is here to try and facilitate a method for German companies to work in the UAE.
Of course, how this develops will be the priority of the country itself. Even Abu Dhabi has to consider that current oil prices will affect their capacity, but I believe that our challenge is to spot opportunities for German companies. Diversification of the Emirati economy has increased pressure on sectors related to oil and gas industry in related fields, such as the petrochemical industry. Here I see a good chance for German companies, especially medium-size companies involved in machinery, which is our backbone in Germany. The machinery industry is made up of mostly family-owned companies that have a certain niche in the market. It is one of our roles to match the right investors from the private sector here with the right companies.
What piece of advice would you offer to potential German investors looking to the UAE for investment opportunities?
The UAE has a very stable system acknowledged by its people and I believe the economic and political system will remain intact. Abu Dhabi, especially, has a kind of planning process, a vision because the emirate has been planning for the long-term by maintaining a diversified and sustainable economy. With regards to oil and gas, I welcome all German companies to take a look at the opportunities involved in special technologies in the oil and gas sector, such as EOR methods. Also, there are German companies with an especially good edge in renewable energies due to our green policies in Germany.
Where would you like to see German involvement in the UAE in the next three years?
German companies have good opportunities here and we need to proactively look for opportunities to join forces with Emirati investors to establish companies and investments locally. I would like to see German companies involved more in the development process to culminate exports. This means developing an infrastructure, green buildings, new materials and new technologies and bringing them to the UAE. I believe there is a demand for all those industries here and I believe Germans have a role to play in these industries.