The Dubai-based contractor Arabtec says it plans to open an office in Baghdad as it targets the country’s lucrative oil and gas sector.
The Dubai-based builder said that the new office would pave the way for its joint ventures with Samsung Engineering and GS Engineering and Construction to win more work in the engineering procurement and construction and infrastructure sectors.
The Burj Khalifa contractor was already in advanced discussions with a number of clients in Iraq for large projects, the company said in a filing.
Oil exports from Iraq have increased significantly since US troops completed their withdrawal from the country in 2011. In 2012, Iraq exported US$94 billion worth of oil, according to Meed data. That flow accounted for more than 90 per cent of government revenue.
Arabtec said that Iraq’s growing oil revenues would “play a vital role in financing the urgently needed redevelopment of the country’s infrastructure”. The company added that the government was also looking to invest in building millions of affordable homes.
“We see great potential for Arabtec in Iraq. Our physical presence there will enable us to capitalise on the significant new business opportunities that are available particularly in oil and gas and infrastructure,” said Hasan Abdullah Ismaik, the managing director and chief executive of Arabtec.
“We are already in talks with the Iraqi government over a number of mega-projects. These talks are at an advanced stage and we hope to announce the results in the very near future.”
Arabtec said that it had started looking for candidates for senior management posts in the Iraq office, including candidates for the position of chief executive.
The move comes just a week after Arabtec announced that it would open a regional headquarters in Serbia to drive its expansion into the Balkan region.
Arabtec’s expansion into Iraq is another part of Arabtec’s ambitious growth strategy to expand beyond its traditional activity of construction in Dubai and the UAE, which had been hit hard by the 2009 property crash.
In June, Arabtec raised Dh2.4bn in the first phase of its rights issue, which it said would be mostly used for its expansion and diversification into affordable housing and oil and gas operations.
Since then the company has announced a string of new initiatives aimed at further diversifying its business, including a joint venture with Samsung’s engineering arm and a new property development business to build on its existing contracting capacities.
In recent weeks, Arabtec has won a Dh2.59bn contract to build the final phase of Gate Towers on Reem Island in Abu Dhabi and a Dh5.7bn contract for a theme park in Jordan.
In May 2012, Arabtec revealed that Aabar Investments, owned by the Abu Dhabi Government, had become the company’s largest single shareholder with a stake of 21 per cent.
“This announcement did not come as a surprise,” said Tariq Qaqish, the head of asset management at Al Mal Capital. “Arabtec is expanding its presence both in terms of geography and the construction sectors in which it is active. Moving into the lucrative markets for oil and gas construction in Iraq is a logical step. And with the Abu Dhabi Government a major shareholder in the company, we anticipate that Arabtec could benefit from high-level political deals, while others will come about through Arabtec’s large scale and capabilities.
“There is always an element of risk in construction, and the market in Iraq faces challenges regarding both the ongoing violence there and political disputes,” he added. “However much depends on the type of project and the location.”
Shares in Arabtec fell 0.9 per cent yesterday to Dh4.26.
lbarnard@thenational.ae