Booming economic deals in the Gulf region lead to increase in legal advice
Law firms from different countries have increased their presence in the Gulf region to advise regional giants such as Aramco and Abu Dhabi National Oil Company (ADNOC) on business.
Sovereign wealth funds in the region, estimated to hold more than $3 trillion, have stepped up their buyout operations and there has been a wave of IPOs generating some 12 billion dollars, which, in turn, has fuelled growing demand for legal advice.
If governments in the region continue to invest in developing their economies and enhancing their international influence, it is likely that trade deals will also continue to grow, prompting Western firms such as Kirkland & Ellis and Linklaters to expand in the region.
Deals in the Gulf region
One of the most relevant companies is ADNOC, Abu Dhabi's national oil company, which stands out as one of the most active energy companies in the world. ADNOC is looking to close a $13 billion deal with the German company Covestro.
The Emirati oil company has already acquired the chemical company Covestro for 15.419 billion dollars, the largest international purchase by a public company in the history of the United Arab Emirates.
It is also important to mention the deal between BP and the international investment arm of the state-owned oil company (XGR). This was announced on 16 December, when they said they had struck a deal for a new gas joint venture in Egypt.
Arcius Energy is the new joint venture company and is 51% owned by BP and 49% by XGR. BP CEO Murray Auchincloss said in a statement: ‘Arcius Energy brings together the strengths of our two companies to create a dynamic new platform for international natural gas growth in the region’.
Notably, according to Bloomberg data, deals involving Gulf companies in 2024, valued at 150 billion dollars, represent a 62% increase compared to the same period in 2023.
Benefits for lawyers
Isaam Al-Tamini, an Emirati lawyer and founder of Al-Tamini & Partners, cites foreign arrivals and the development of regional economies as a sign of health. He told Bloomberg that increased competition is encouraging local and international firms to attract the best legal professionals, he said, to sit down with an international investor.
It is estimated that top lawyers could generate approximately more than 1,000 dollars an hour in the Gulf region. The boom in the Gulf will allow partners working on international deals involving Gulf companies to receive billings at levels close to those in New York and London.
English law firm Linklaters said in a statement that Covestro's firm also expanded its global investment funds practice in the Middle East and transferred a senior lawyer to the region to lead this work.
US law firm Kirkland & Ellis also established an office in Saudi Arabia in order to focus on financial transactions and private equity flows both inside and outside the market.
Aramco and ADNOC: major oil companies
A decade ago, business in the Gulf was different, as ADNOC awarded the exploitation rights to its largest onshore field for 40 years in exchange for upfront payments that valued the project at approximately 22 billion dollars.
This Emirati company, for example, has diversified its business beyond its relationship with Shearman & Sterling. The company continues to work with Shearman & Sterling, but has also attracted other firms, and a spokesperson for ADNOC confirmed that they use a variety of legal services.
Aramco, a leading oil producer, also has a team of lawyers from White & Case. The Saudi oil company closed with a net profit of 121.3 billion dollars in 2023, the second best figure in its history.
Oil trading in the Gulf States, increased competition, as well as a possible economic slowdown, could put pressure on law firm profits. In addition, sanctions against Iran and Russia will lead to increased legal advice due to the need for compliance in the states of the region.