The oil field industry in Dubai is a cornerstone of the UAE’s economy. As a part of it, you must be aware that the operational success in this industry relies heavily on making strategic decisions. It is also a fact that investing in state-of-the-art equipment is also crucial in the oil field industry. However, not every business can invest in expensive equipment.
Now, the question arises whether you should buy or rent? Each option has its unique benefits and you should explore all of them to choose what suits your business’ needs and circumstances best.
In this blog, we will discuss whether you should buy or rent oil field equipment. Check out the key considerations for making an informed decision. Also, learn why you should only entrust reliable oil field equipment suppliers in Dubai for the same.
Project Duration
The equipment demand varies based on the project duration. For short-term projects or ones with fluctuating demands, renting is a better option, offering flexibility. You need not invest in and maintain the equipment without a long-term commitment. Investing in such equipment isn’t feasible as the machine or equipment might sit idle during a low-activity period.
However, investing in oil field equipment is the right choice for long-term needs and is more cost-effective. Also, for recurring needs, there is an assurance that the equipment is readily available. There is no hassle concerning rental agreements. Additionally, buying offers a stable and scalable solution for projects with predictable timelines and requirements.
Assessing Capital Availability
Buying oil field equipment means substantial capital outflow. This investment offers a return for long-term & recurring projects and eliminates the need for reliance on external suppliers. Also, the equipment can be adjusted for operational needs and customized, which isn’t possible with a rental machinery. So, before committing to buying, assess your capital and if it is feasible to explore debt options.
Businesses that are prioritizing other significant investments can go for the rental option. It is a practical alternative, reducing the upfront cost and gaining access to the most advanced machinery and equipment. Additionally, working with reputable oil field equipment suppliers in Dubai ensures that whether you rent or buy, you get reliable and efficient tools tailored to your operational requirements without breaking the bank.
Maintenance and Downtime
All machinery and equipment require maintenance & upkeep, and oil field equipment is no exception. Maintenance is critical to such large machinery and numerous equipment to ensure no project delays. There should be proper maintenance & repair schedules, and parts should be replaced regularly to avoid breakdown. All of it results in significant costs and operational downtime. The responsibility of such maintenance lies with the owner to allocate resources for smooth operation.
If you rent the machinery, you are relieved of the responsibility, as the burden of maintenance lies on the supplier. Most rental agreements have maintenance and repair service clauses. It reduces any unexpected repair cost and the risk of downtime due to breakdown. However, if the rental agreement is for the long term, then the terms shall vary accordingly.
Embracing Technological Advances
Today, technology is advancing faster than ever, and businesses must evolve too. Buying machinery would tie you to it for the unforeseeable future and will eliminate the possibility of embracing new changes. The modern machines are equipped with advanced features to improve safety, efficiency, and environmental sustainability that you will miss out on if you invest in certain equipment. However, it only applies to certain machinery.
However, renting offers a flexible choice to rent machinery equipped with the latest technology. It reduces the financial strain of investing in machinery while giving you access to the latest equipment. If staying ahead is vital for your business and you need updated technology for future operations, it is advised to rent the machinery.
At NSGT, we update our machinery frequently to meet the latest market demands. We understand the importance of adapting to new technologies and, thus, offer state-of-the-art machinery to keep you ahead of the competition.
Storage and Logistics
When purchasing oil field equipment in Dubai, storage and transportation costs are often overlooked. However, they make up a significant part of the overall cost. Large machinery requires great space for storage, secure one on top of that. You might even need to rent a space for secure storage, which adds to the expenses further. The transportation costs to and from the project site also add up.
You won’t face this problem in renting, as once the project is completed, you can directly send it back to the supplier. You are freed from the storage responsibility. Many suppliers in Dubai also offer delivery, installation, and setup services for rented equipment, further simplifying your logistics and reducing overhead expenses. Timely delivery of the equipment also reduces renting costs.
Tax Implications and depreciation
The one advantage of buying equipment that benefits business owners is that you can claim tax deductions on depreciation. You can also claim depreciation on pre-owned machinery, which helps offset the investment cost. However, you must understand the tax regulations concerning different equipment to enjoy the most tax-advantageous option and how it applies to your business.
Renting doesn’t offer this advantage. Since you don’t own the machine, you can’t claim depreciation. You can treat the renting expenses as operating expenses, though. It is advised to consult a financial adviser who understands Dubai’s tax regulations concerning the oil field industry.
Which is The Right Choice?
Renting or Buying? It is a subjective choice that depends on your budget, business requirements, and the type of equipment. For businesses with long-term needs and availability of capital, buying the equipment is advised. For small businesses that lack financial stability, renting is a better option.
By carefully evaluating your project duration, financial position, and operational goals, you can choose to maximize efficiency and profitability in Dubai’s dynamic oil field industry.
Conclusion
Partnering with a trusted oil field equipment supplier in Dubai is the answer to your dilemma. Make an informed decision by consulting NSGT today. We offer both options and offer tailored solutions for your business needs.
Our 30+ years of experience in the industry has helped us understand the specific business needs and how best to satisfy them.
For any industrial equipment needs, contact us today!
