Amid depressed oil prices, industry players eye renewable energy
* Companies have reacted to downturn by cutting back operations and reducing capital expenditure
* Many MENA companies are investing in sectors such as manufacturing, services and tourism
* Energy and natural resources are considered core sectors
Economic diversification is the word of the day. As oil-producing and -exporting countries drive their agendas in that direction, leading industry players are also working towards diversification. specifically eyeing renewable energy.
Essel Group, a leading business conglomerate with a diverse business across media, entertainment, packaging, infrastructure, education, precious metals and technology sectors, has been a strong player across several industries for nine decades now.
AMEinfo got the chance to hear from Mr. Gagan Goel, CMD and Mr. Punkaj Gupta- Joint MD and Group CEO, about their assessments of the different markets and their forecasts for 2017.
How do you currently assess the market, what were some of the trends you captured throughout the year across the industries?
This year we have continued to see considerable volatility in the commodities markets and companies throughout the industry have reacted to the prolonged downturn by cutting back their operations and reducing their capital expenditure.
There are signs emerging that the oil markets are rebalancing and this perception was recently strengthened recently by the supply deal agreed by OPEC and other exporters. The mining industry has also started to recover this year after an extended period of low prices and there is reason to be optimistic about the medium- to long-term prospects for the sector.
What are some of the challenges you see in the energy sector and industries, especially given the current oil market conditions?
We view the low oil price environment as an opportunity for growth and our natural resources business is designed to be successful in the current depressed market conditions.
We took the decision to invest at a point in the cycle where costs were at an all-time low and we have focused on acquiring a pipeline of diversified natural resources prospects across Africa and North America. We are self-funded, well-capitalised and in a position to take advantage of value at the bottom of the cycle.
Many countries in the MENA region are diversifying away from oil. What is your assessment of each: Saudi Arabia, UAE, Qatar, and other countries you might find are doing a noticeable job in that regard?
Many companies in the MENA region are diversifying in response to the low oil price environment, and investing for growth in sectors such as manufacturing, services and tourism.
What opportunities do you see in the future?
Energy and natural resources are the core sectors, which have their own cycle of upturns and downturns due to various economic cycles.
As EGME, we are very confident in the long-term prospects for the natural resources industry and we are actively pursuing assets located in proven basins with near-term production potential around the world.
We see great opportunity in the oil and gas and mining sectors. We are confident that by targeting competitively valued assets in underdeveloped markets, we have the right strategy to successfully navigate the current conditions and become a leading, low-cost natural resources company.
How did Essel Group ME fare in 2016?
It has been a very positive year for Essel Group ME and we have made strong progress across the business. We are building an exciting, diversified portfolio of natural resources assets and we have reached a number of important milestones over the past 12 months. Perhaps the most notable was the completion of a 2D seismic survey on our highly promising oil prospect in Kenya, Block 2A. We remain very much on course to meet our target of commencing drilling in the second quarter of 2017.
What are you focused on for the near future?
Like many of our peers in the oil and gas industry, we are also seeking to develop a renewable energy offering which leverages increasing demand for low carbon energy. In October, we made our first significant investment in this space by acquiring a stake in LeadCold Reactors, a Swedish-Canadian company that is developing nuclear reactors for commercial off-grid use.