ADNOC STRATEGY 2030

MEOG - As Oil & Gas Middle East unveils its annual Power 50 list of the most influential oil and gas figures in the region, we spoke to ADNOC Group CEO Dr. Sultan Al Jaber, who has ranked first on the list for three consecutive years, about his growth strategy for the company.

What spurred you to drive ADNOC's transformation?

Dr. Sultan Ahmed Al Jaber: ADNOC is a critical driver of the social and economic development of the UAE and a key enabler of its economic diversification. Since being appointed CEO, my primary objective has been to ensure ADNOC not only continues to play this role but also deepens its impact. It was clear, when I joined, that the energy landscape was evolving faster than ever before, and we could no longer continue business as usual and expect the same results. We needed to think differently, be more creative and move beyond our comfort zone.

Realising that we cannot control the price of oil, we are focused on what we can control. This fundamental reality is at the heart of our 2030 Smart Growth Strategy. Our unrelenting attention is on minimising costs, enhancing our operational efficiency, and maximising margins to ensure we thrive in the new multi-layered energy landscape. At the same time, we are expanding our base of partners and investors. Finally, we are shaking up the ADNOC culture to unlock and create greater value from all our resources, with the aim of making ADNOC a model, not simply for a modern national oil company, but for how a modern energy company should operate.

What are some of the main challenges and successes ADNOC has had as part of this transformation?

The main consideration when driving transformation is keeping the organisation with you. Therefore, developing ADNOC's internal culture into one that nurtures a dynamic, commercially focused mindset has been an essential task. This internal work has allowed us to move quickly and to deliver a series of firsts for the organisation. In a short time, ADNOC has consolidated its businesses and unified its brand identity; opened-up its concessions to new strategic partners; competitively tendered new exploration blocks for the first time; launched the UAE's unconventional industry; embarked on a five-year, $45bn expansion of its downstream operations; undertaken a digital transformation and made our first moves to expand internationally.

We have also delivered financial firsts including ADNOC's debut capital markets transaction, the issuance of the Abu Dhabi Crude Oil Pipeline (ADCOP) bond; the IPO of ADNOC Distribution; concluded a landmark multi-billion-dollar midstream pipeline infrastructure partnership with KKR and BlackRock and agreed strategic equity and commercial partnerships between ADNOC Drilling and Baker Hughes as well as ADNOC Refining and Eni and OMV. These achievements are just the start of our journey to create a new kind of national oil company that is fit to thrive in any future scenario.

Where is ADNOC currently situated on the path towards its 2030 Strategy goals? What are its short-term and long-term goals?

Having laid the foundation for our 2030 Strategy, we are embarking on the next phase of our transformation, built around new strategic partnerships and investments. This, combined with the more proactive management of assets and capital, allows us to unlock capital from within ADNOC, drive business and revenue growth, optimise returns across our businesses and secure market access.

The upstream projects we are pursuing will further diversify the UAE's hydrocarbon resource base, provide high-grade feedstock to expand our downstream activities and ensure the most effective utilisation of Abu Dhabi's oil and gas at commercially competitive rates. Meanwhile, our downstream expansion plans will create a range of investment and partnership opportunities for global investors. It will also see the entire Ruwais complex upgraded to increase its flexibility and integrated capabilities to produce greater volumes of higher-value petrochemicals and derivative products.

Where do you see the most potential for growth for your organisation?

Global demand for energy continues to grow but the demand dynamic is shifting from west to east and from north to south, as emerging economies become more prosperous. By 2040, non-OECD countries will account for over 70% of global energy demand. These changes also sit alongside forecasts of a rapid expansion in the market for products derived from petrochemicals, from everyday plastics to high-grade polymers, globally and particularly across Asia.

The mission for all energy companies is not just to keep up with these trends, but to stay ahead of the curve. At ADNOC, we are calling this mission "Oil and Gas 4.0"- a strategic response to ensure our company can meet the expanding demand for energy and higher value products in the fourth industrial age. A key pillar of this response is our strategic approach to partnership.

ADNOC is capitalising on the demand trends upstream and downstream, through long-term, strategic partnerships that embed and apply the latest technology, focus on commerciality and offer greater market access.

ADNOC has always been a reliable producer of crude and it will remain a major global supplier of crude and gas. However, our intent is to become a more flexible and agile integrated energy business, able to identify and take advantage of the best opportunities across the entire value chain.

We have seen ADNOC open up to foreign investment across the value chain—tell me about this strategy and its place in ADNOC's future.

Shifting global trends are creating an energy landscape where new rules of engagement are required. In this new energy era, we need to adopt more creative strategies and more flexible business models to capture growth. So, we have developed an expanded approach to partnerships and created several investment opportunities across our entire value chain.

Our new approach will deliver two key benefits to ADNOC. Firstly, it will allow us to unlock and maximise value and invest in growth. Secondly it will enable us to accelerate our growth, whilst improving integration across the ADNOC business. It will also enable us to more proactively and efficiently manage our asset portfolio and capital structure.

Crucially, these new types of partnerships will help optimise our operational and financial performance, at both the ADNOC Group and asset level, and help secure access to target markets and the new centres of global demand. They will also bring technological expertise and foster better knowledge sharing between ADNOC and our partners, as well as enable the co-development of cutting-edge intellectual property and technology.

The recent signing of one of the largest ever refinery transactions, in which Eni and OMV acquired 20% and 15% shares in ADNOC Refining respectively, is a prime example of the kind of partnerships that support our ambition of becoming a global integrated energy company, with the flexibility to respond quickly to shifting market needs and dynamics.

What are the key digital technologies that ADNOC is primarily focused on in 2019? How will these technologies benefit the company?

We are incorporating the latest in artificial intelligence, data analytics, blockchain and machine learning into our Panorama Command Centre in order to empower our people to make better, quicker, data-driven decisions. In doing so we are making ADNOC an incubator of talent that will build long term resilience into our company and ensure it continues to provide the energy the world needs while making a lasting positive impact for the UAE and its partners.

You plan to make the UAE gas self-sufficient by 2030, and turn it into a net exporter of gas. How do you plan to achieve these goals?

We are using a creative approach in pursuit of our goals to become gas self-sufficient, by 2030, and eventually transition to a net exporter of natural gas. By exploiting undeveloped reservoirs and tapping our gas caps we are reducing the average cost of our available gas resources. In short, we have reframed the business model for sustainable gas production in the UAE.

Under the integrated gas strategy, we will develop the Ghasha ultra-sour gas concession, which is expected to produce over 1.5bn cubic feet of gas per day, when it comes on stream around the middle of the next decade. At the same time, we will increase production from the Shah sour gas field to 1.5bn cubic feet per day and move forward to develop the sour gas fields at Bab and Bu Hasa.

We also plan to tap gas from our onshore and offshore gas caps and unconventional gas reserves, as well as new natural gas accumulations, which will continue to be appraised and developed as the company pursues its exploration activities.

The combination of rising demand for gas, more advanced technology and our industry-leading experience in developing sour gas fields, makes it possible for us to commercially unlock value from these vast sour gas resources for the first time.

How do you expect shale and tight gas to play into ADNOC's wider gas strategy?

We have commenced an unconventionals program to explore, appraise and develop the Ruwais Diyab Unconventional Gas Concession area's unconventional gas resources. The concession has the potential to be a high impact play, ranking alongside the most prolific North American shale gas plays, which could produce about 1bn standard cubic feet of gas per day before 2030.

The program marks an important and historic milestone in the development of Abu Dhabi's gas resources, as we deliver our strategic commitment to ensure a sustainable and economical gas supply. It will also enable ADNOC to undergo an accelerated learning curve which will help drive efficiencies in drilling and hydraulic fracturing, allowing us to create higher value from what is a more complex resource compared to the giant conventional oil and gas fields of Abu Dhabi.

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Earlier:

2019, April, 1, 10:40:00 ADNOC, BAKER HUGHES PARTNERSHIP ADNOC plans to grow its conventional drilling activity by 40% by 2025 and substantially ramp up the number of its unconventional wells, as it targets 4mn barrels of oil production capacity per day by the end of 2020 and 5mn by 2030

2019, March, 25, 10:55:00 ADNOC, OMV AGREEMENT Abu Dhabi Crown Prince and Deputy Supreme Commander of the UAE Armed Forces Sheikh Mohamed bin Zayed Al Nahyan and Chancellor of Austria Sebastian Kurz attended the signing ceremony of Memorandum of Understanding (MoU) between Abu Dhabi National Oil Company (ADNOC) and OMV and Borealis to explore new opportunities for collaboration in the downstream sector.

2019, February, 25, 11:35:00 ADNOC INVESTMENT AGREEMENT $4 BLN MEOG - The Abu Dhabi National Oil Company (ADNOC) has signed a multi-billion-dollar midstream pipeline infrastructure partnership with KKR and BlackRock. Through a newly formed entity, ADNOC Oil Pipelines, ADNOC will lease its interest in 18 pipelines for a 23-year period. ADNOC received upfront proceeds of $4bn from the transaction, which is expected to close in Q3 2019.

2019, February, 20, 10:40:00 ADNOC RATING AA+ ENA - The Abu Dhabi National Oil Company, ADNOC, announced that Fitch Ratings, Fitch, has assigned ADNOC Group a standalone credit rating of AA+. The rating, according to Fitch, highlights the company’s high upstream output and significant reserves, strong profitability, commercially-focused business model, downstream integration and conservative financial profile. The rating, Fitch said, sits at the upper boundary of the agency’s rating spectrum for all oil and gas companies.

2019, January, 28, 09:50:00 ENI, OMV, ADNOC: $5.8 BLN REUTERS - Italy’s Eni and Austria’s OMV have agreed to pay a combined $5.8 billion to take a stake in Abu Dhabi National Oil Company’s (ADNOC) refining business and establish a new trading operation owned by the three partners.

2018, December, 10, 08:15:00 ADNOC INCREASES VALUE ADNOC - The Abu Dhabi National Oil Company (ADNOC) has announced its successful collaboration with IBM, piloting a Blockchain-based automated system to integrate oil and gas production across the full value chain.

2018, November, 14, 11:30:00 ADNOC & SAUDI ARAMCO COOPERATION ADNOC - The Abu Dhabi National Oil Company (ADNOC) signed a framework agreement with Saudi Aramco (Aramco), to explore potential opportunities for collaboration in the natural gas and Liquefied Natural Gas (LNG) sectors.