Adnoc pre­pares for the fu­ture

The state-owned oil gi­ant is in the midst of an am­bi­tious growth strat­egy both at home and abroad

Arabian Business English - - THE BIG STORY - BY BLOOMBERG / BERND DEBUSMANN JR

STATE-OWNED ABU DHABI NA­TIONAL Oil Com­pany (Adnoc) is in­creas­ingly look­ing abroad for in­ter­na­tional mar­kets for its oil and gas and search­ing for in­vestors at its ramps its op­er­a­tions at home, ac­cord­ing to CEO Sul­tan Al Jaber.

In Al Jaber’s view, Adnoc – which is buck­ing a world­wide trend of tight spend­ing caps – is en­sur­ing fu­ture de­mand by seek­ing re­finer­ies and other over­seas as­sets. This ap­petite for global growth ex­tends to liq­ue­fied nat­u­ral gas, LNG, with plans in the works to be­gin ex­ports once Abu Dhabi be­comes self­suf­fi­cient for its fuel re­sources. “We are work­ing on an ex­pan­sion plan for our LNG fa­cil­ity, which will be sup­ple­mented by us ex­plor­ing other LNG op­por­tu­ni­ties be­yond our bor­ders,” he says.

Much of this ex­pan­sion, ac­cord­ing to Adnoc of­fi­cials, is driven by for­eign de­mand over the course of the next sev­eral decades. Abu Dhabi’s Supreme Petroleum Coun­cil has al­ready ap­proved Adnoc’s new in­te­grated gas strat­egy that is fore­cast to sus­tain LNG pro­duc­tion through 2040 and al­low Adnoc to seize in­cre­men­tal LNG and gas-to-chem­i­cals growth op­por­tu­ni­ties where they arise.

“The LNG mar­ket is pro­jected to grow at a ro­bust pace, fu­elled by de­mand from Asia and de­vel­op­ing coun­tries who want ac­cess to a clean and af­ford­able source of en­ergy,” says Ab­du­laziz

Al­hai­jri, di­rec­tor of Adnoc’s Down­stream Direc­torate. “Adnoc LNG is well po­si­tioned to lever­age this op­por­tu­nity and is now mod­ernising its com­mer­cial ap­proach from a sin­gle-cus­tomer to a multi-cus­tomer busi­ness that in­cludes a num­ber of global util­i­ties as well as port­fo­lio play­ers and traders.”

Ac­cord­ing to in­dus­try ex­perts, LNG is the world’s fastest grow­ing hy­dro­car­bon, with a growth rate of ap­prox­i­mately four per­cent per an­num – twice that of nat­u­ral gas. Glob­ally, LNG is ex­pected to ex­ceed 500 mil­lion tonnes per an­num by 2035, up from al­most 300 mil­lion per an­num in 2017.

Part­ners abroad

Tra­di­tion­ally, Gulf pro­duc­ers have part­nered with for­eign com­pa­nies whose fore­bears dis­cov­ered oil in the re­gion some 100 years ago. In the case of Adnoc – which has worked with in­ter­na­tional part­ners for over 40 years – the com­pany has re­ceived 39 bids for new ex­plo­ration projects that will be awarded by early next year, ac­cord­ing to Al Jaber. The com­pany seeks to boost oil pro­duc­tion ca­pac­ity to five mil­lion bar­rels a day by 2030, up from five mil­lion now.

Among the com­pany’s most re­cent deals were gas-de­vel­op­ment deals with France’s To­tal SA and Italy’s Eni, as well as an agree­ment with Saudi Aramco to ex­plore op­por­tu­ni­ties in LNG. “Our in­tent here is to ad­vance our gas port­fo­lio,” Al Jaber notes. As part of the agree­ment, Adnoc and Aramco will work to­gether to as­sess­ment in­vest­ment op­por­tu­ni­ties across the LNG value chain.

In­vest­ment at home

As Al Jaber notes, Adnoc’s in­ter­na­tional plans work in tan­dem with an am­bi­tious strat­egy to boost its op­er­a­tions do­mes­ti­cally. Just last week, for ex­am­ple, the com­pany an­nounced a $1.4 bil­lion in­vest­ment to up­grade and ex­pand its Bu Hasa field, which is ex­pected to in­crease crude oil pro­duc­tion to 650,000 bar­rels per day – mark­ing an im­por­tant step to­wards the de­liv­ery of its 2030 growth strat­egy.

“This sig­nif­i­cant in­vest­ment in the Bu Hasa field will en­able pro­duc­tion ca­pac­ity to be in­creased and gen­er­ate ad­di­tional value,” Al Jaber says of the deal. “We are on track to meet our pro­duc­tion ca­pac­ity tar­get of 3.5 mil­lion bar­rels of oil per day by the end of this year – to four mil­lion bar­rels per day by the end of 2020 – and this con­tract is yet an­other sign of our clear com­mit­ment to mak­ing smart in­vest­ments to max­imise the value of

Abu Dhabi’s oil re­sources.”

rAd­noc CEO Sul­tan Al Jaber says the com­pa­nyis work­ing to ex­pand its gas port­fo­lio with in­ter­na­tional part­ners

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