Adnoc rising
ADNOC TO AGGRESSIVELY EXPAND IN UPSTREAM AND DOWNSTREAM
The oil giant is on way to aggressively expand in upstream and downstream sectors
Abu Dhabi National Oil Company (Adnoc) is pushing ahead with an ambitious strategy to become a global player in the oil and gas industry as part of Abu Dhabi’s vision 2030. The new strategy will allow the UAE to attract international companies looking to invest locally, and alow Adnoc to partner with other energy giants to expand its operations worldwide.
While Adnoc has already launched major expansion in the upstream oil and gas sector in Abu Dhabi, it is also moving aggressively downstream.
Last week, it unveiled $45 billion (Dh165 billion) expansion plans for Ruwais Refinery to create the world’s largest integrated refining and petrochemicals destination. It is expected to create 15,000 high-skilled jobs and contribute 1 per cent to the UAE’s GDP per year.
Speaking at the Downstream Investment Forum on May 13, Dr Sultan Ahmad Al Jaber, Chief Executive Officer of Adnoc, said the company will build on Abu Dhabi’s half-century legacy as a reliable, trusted, stable partner of choice to expand existing relationships and forge new strategic partnerships.
“We will look for partners willing to invest with us locally in order to grow together globally. Partners who bring strategic value add and access to smart capital. And partners, who offer advantaged accesses to high growth markets.”
He also said upstream business will always remain a core part of the firm’s DNA supplying the world with cost competitive crude but at the same time they will focus on the downstream sector where demand for petrochemicals and polymers will more than double over the next 20 years. In the last few months, Adnoc has been awarding concessions to a mix of companies from Asia as well as from Europe deviating from a traditional stand of awarding contracts to firms from the West.
Market share
For the first time, it awarded concessions to firms from China, Korea and India expanding its partnership with international companies and boost its market share in the rapidly growing markets of Asia.
China’s CNPC (China National Petroleum Corporation), India’s ONGC Videsh and South Korea’s GS Energy, among others are part of Abu Dhabi’s plans to increase oil production to 3.5 million barrels per day in the coming months.
Adnoc is also expanding partnerships in the downstream sector within the UAE. This week, the company announced that it has signed a project development agreement with Cepsa of Spain for a new, world-scale Linear Alkylbenzene (LAB) facility in Adnoc’s refining and petrochemicals complex in Ruwais. It is also broadening its relationship with OCP Group of Morocco to establish a fertilisers joint venture with production hubs in the UAE and in Morocco.
The company is also looking to forge a close relationship with India.
Last week, the first consignment of 2 million barrels of crude oil from Adnoc to be stored in India’s Strategic Petroleum Reserves at Mangalore departed Abu Dhabi.
This is the first investment by a foreign company in India’s strategic reserves programme. Adnoc is also looking at buying a stake in India’s Ratnagiri refinery on the west coast. India imports 82 per cent of its crude oil needs, 8 per cent of which is supplied by the UAE.
“We will look to invest strategically into select international assets and businesses which will bring us greater market access, as well as clear synergies with our domestic growth engine in Ruwais. Our new downstream strategy represents a milestone in Adnoc’s nearly 50 year history as we seek to become a more resilient, flexible and diverse energy company,” an Adnoc spokesperson told Gulf News.
Listing
The company is also moving ahead in privatising some of its subsidiary companies and assets. Adnoc Distribution, the fuel and retail arm of Abu Dhabi National Oil Company (Adnoc) was listed on Abu Dhabi Securities Exchange last year.
The company raised Dh3.1 billion after it offered 10 per cent of its shares through an initial public offering (IPO).
According to analysts, Adnoc wants to clearly increase its global footprint through investments but it wants to play smartly.
“We fully expect Adnoc to have a risk averse investment strategy. They will be very selective about where to invest and the timing of their investments,” said Jaafar Al Taie, managing director of Manaar Energy Group.
“Adnoc does not want to be stuck in a stagnant national oil company business model. It is taking note of the experiences of successful national oil companies such as Petrobras, Aramco, Petronas, Statoil, Gazprom who have all invested in global supply chains and venture portfolio.”
We will look for partners willing to invest with us locally in order to grow together globally. Partners who bring strategic value add and access to smart capital.”
Dr Sultan Ahmad Al Jaber | CEO, Adnoc