Big Question: What do UK energy companies need to know before exporting to...?

Renato Cordeiro

Commercial Manager at the Department of International Trade (DIT) Brazil

… Brazil?

Brazil offers huge opportunities for UK companies active in the oil and gas and renewable energy sectors. There are around 200 British companies already doing business in the country through local representatives such as agents or distributors, or producing parts of their products locally with Brazilian partners.

However, the market does have its challenges. Brazilian tax law can be complicated. We always recommend that British companies interested in exporting to Brazil find a good partner, not only with knowledge of the market demands but also with deep experience on taxation. An export to Brazil can cost a lot more without the assistance of an experienced local expert.

A second tip is relationships matter. Do not believe that good contracts can be secured from behind a desk in the UK. We strongly recommend British companies visit the market regularly to build a relationship with your costumers.

Major events including Rio Oil and Gas, OTC Brazil and the annual ‘UK&BR: Partners in Energy’ conference – the last one promoted by the DIT with EIC support – are excellent opportunities to network and meet buyers.

The DIT Energy team based in Rio can support British companies to meet the right contractors and partners on the ground, as well as provide market intelligence to help them enter the market successfully.

The UK’s DIT helps businesses export, drives inward and outward investment, negotiates market access and trade deals, and champions free trade. As well as providing trade and investment services, 
DIT Brazil offers practical support to help UK companies succeed in Brazil, and Brazilian companies set up and invest in 
the UK. For more information please email renato.cordeiro@mobile.trade.gov.uk

Hezrie Musa

Trade Manager at the British Malaysian Chamber of Commerce Berhad (BMCC)

… Malaysia?

Accounting for 20–30% of the national GDP, oil and gas is a priority sector in Malaysia and plays a vital role in the economy, despite the low price of global crude oil. Supported by over 3,500 oil and gas companies, comprising local and international players, the growth rate of this sector is expected to be 5% annually.

This multi-billion industry is vested with state-owned company PETRONAS, which acts as both operator and regulator for Malaysia’s oil and gas industry. Companies therefore need to comply with PETRONAS requirements if they wish to venture into the industry.

To maintain global competitiveness, PETRONAS, together with the Malaysian government, has embarked on several initiatives to reinvigorate the oil and gas industry, and there are huge opportunities available for UK companies.

The country has worked hard on a number of reforms to improve the business climate, including the introduction of an online registration system for the goods and service tax to make starting a business easier.  

Malaysia has also strengthened access to credit by adopting a new law that established a modern collateral registry, improved minority investor protection through the requirement for more corporate transparency, and made importing and exporting easier through the infrastructure and equipment improvements at Port Klang.

Most exporters find that using a local distributor or agent is the best first step for entering the Malaysian market. At BMCC, we have the local knowledge to help you get started.

BMCC works closely with key stakeholders in Malaysia’s energy industry, including Malaysian Oil & Gas Services Council (MOGSC) and EIC Asia Pacific, based in Kuala Lumpur. BMCC is the official delivery partner of DIT Malaysia and has the capabilities to support UK exporters and services providers into Malaysia. If you are interested in doing business in Malaysia, please contact hezrie@bmcc.org.my for assistance or further information.

Euan MacKinven

Senior Executive – Energy at Scottish Development International

… the UAE?

Setting up a new entity in another country can be a daunting task for any company. The Middle East and in this case, the UAE, holds significant opportunity for UK exporters but understanding the realities of doing business in these markets is essential. Not only are the laws and language different, but the business standards are, too – including local content requirements.

In February 2018, ADNOC announced its In-Country Value Certification Programme (ICV), meaning that all business partnerships with ADNOC must now include an ICV assessment as part of the tender evaluation and award process. The ADNOC ICV strategy seeks to stimulate private sector partnerships and opportunities resulting from their 2030 growth strategy, which looks at:     

• Socio-economic development     
• Improved knowledge transfer     
• Emiratisation.

Going forward, localisation programmes will play a pivotal role for companies seeking to trade with major national oil companies in the region since their implementation across the GCC. Saudi ARAMCO has its IKTVA Programme, Oman has Omanisation and Qatar has Tawteen.

It should be noted that all localisation programmes operate independently from one another. Therefore, companies should first assess where the best opportunities for their business are prior to committing to a market. With the right support from government organisations, proper due diligence and long-term commitment from companies, the rewards in this market can be great.

Scottish Development International (SDI) is the international arm of the Scottish government’s economic development agency, Scottish Enterprise. With over 30 offices worldwide, SDI’s role is twofold: to help grow Scottish exports, and to increase inward investment to the country. In the Middle East, SDI has offices in Dubai, Abu Dhabi and Al Khobar in Saudi Arabia. If you are thinking of exporting to the UAE or the Middle East, for more information please email euan.macKinven@scotent.co.uk

What do new exporters need to know when exporting?

Cristina Pirela

International Trade and Investment Associate – Energy, Environment and Infrastructure at DIT Houston

…the US?

The United States has long been a world leader in energy production and supply, and maintains its position as one of the largest energy consumers. From oil and gas to renewables, including solar, wind and energy storage, US market opportunities have continued to grow, with investments in the energy sector reaching US$276bn in 2016.

The re-emergence of the US as an energy powerhouse is seen in the transition from a natural gas deficit to a net exporter of oil. The Houston economy stands at the forefront of these opportunities, with the headquarters for companies in all segments of upstream, midstream and downstream, employing 4,600 energy-related firms.

Similarly, clean energy in the US witnessed a rise of 12% to US$64.2bn in 2018 due to solar and onshore wind. More growth is expected due to the emerging offshore wind market in the north-east region, which has a project pipeline of 19GW to be installed by 2030.

With these opportunities, the US still faces import barriers for companies in the UK, such as local content requirements, recent steel and aluminium tariffs, and political uncertainty. The UK’s DIT is here to support your business in manoeuvring through export barriers and opportunities.

The DIT US team is charged with transatlantic trade development between the UK and the US, as well as assisting US companies looking to invest in the UK. 

For all questions, concerns, and support, please email the Houston team at cristina.pirela@mobile.trade.gov.uk

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