The Abu Dhabi National Oil Company (ADNOC) announced the expansion of its partnership model to span the Group’s entire value chain as well as the more active management of its portfolio of assets.
This new initiative builds on ADNOC’s flexible operating model and its 2030 growth strategy. It will enable ADNOC to unlock and maximize significant value from across the Group, drive business and revenue growth, optimize performance, and secure greater access for its products in key growth markets.
At the heart of this new approach is a range of new and compelling partnership and co-investment opportunities in the oil, gas, refining and petrochemical space. Some of these opportunities will include, but will not be limited to:
• Upstream - develop and further expand a regional, fully integrated drilling company. The development of upstream concessions with value-added partners that may also seek to strategically partner with ADNOC in other parts of the value chain;
• Midstream - create a new energy infrastructure venture to both generate value and further optimize ADNOC’s assets. This venture might include, for example, the bundling of select ADNOC infrastructure assets such as oil, gas or refined products pipelines and storage facilities;
• Downstream - further open ADNOC’s downstream business to create a number of new partnership and investment opportunities across its portfolio of refinery and petrochemical assets. These new ventures will bring in partners to improve integration, realize synergies and expand technological capability and output to meet the rising global demand for petrochemical products.
His Excellency Dr. Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO commented: “Shifting global trends are creating a new energy landscape where new rules of engagement are required. In this new energy era, we need more creative strategies and more flexible business models to capture growth.”
H.E. Dr. Al Jaber continued, “Expanding our partnership model across the whole of our value chain and more actively managing our portfolio will allow us to both unlock value and reinvest capital into new, high growth opportunities. It will enable us to accelerate our growth, increase revenue and improve integration across the ADNOC value chain. It will also spur domestic economic growth as well as bring new jobs and benefits to the UAE and its citizens.”
“This expanded partnership model marks a key milestone in the future growth of ADNOC. At its core is a re-defined more integrated and flexible partnership model for our oil, gas, refining and petrochemical businesses. We are developing a range of creative co-investment opportunities from across our value chain and we will soon begin a dialogue with both new and existing partners from around the world.”
The new initiative is an integral part of the ongoing transformation of ADNOC and, under the guidance of the UAE’s wise leadership, will accelerate the delivery of ADNOC Group’s 2030 strategy, namely, a more profitable upstream business, a more valuable downstream business, and an economic and sustainable supply of gas for Abu Dhabi.
Potential partial listing of select ADNOC businesses
Central to ADNOC’s new approach will be the more active management of its portfolio of assets and businesses. ADNOC is also considering the IPO of minority stakes of some of its services businesses which have attractive investment and growth profiles. Such IPOs would support the growth and expansion of the UAE’s private sector and equity capital markets and will allow the public, and other investors, to invest alongside ADNOC and benefit from the future growth of these assets. ADNOC will continue to be a committed, long-term majority shareholder in any businesses that are listed. Importantly, there will be no IPO of ADNOC, the Group holding company. ADNOC will remain fully owned by the Government of Abu Dhabi.
Capitalizing on industry trends and financial strength
ADNOC’s expanded approach to partnerships complements its open operating model, capitalizes on key trends in the energy industry and leverages ADNOC’s robust financial strength and 45-year legacy of successful energy partnerships.
H.E. Dr. Al Jaber commented, “Our new approach comes at a time when global economic growth and energy demand is shifting East. These changes in energy demand sit alongside a rapid increase in demand for products derived from hydrocarbons - petrochemicals, plastics and polymers."
He added, “Long term strategic partnerships and deeper collaboration will define the next era of the energy industry. ADNOC’s longstanding experience of creating successful energy partnerships makes it uniquely placed to succeed in this dynamic, new environment, with Abu Dhabi recognized around the world as a trusted and reliable partner.”
Mutually beneficial partnerships
ADNOC has developed a clear set of criteria by which it will select new partners, including; the ability of partners to secure better access to the world’s fastest growing target markets for ADNOC’s products; the willingness to contribute technical expertise and co-develop new technologies alongside ADNOC’s own capabilities; and, the potential to co-invest strategically across different parts of a more integrated ADNOC value chain. ADNOC will in turn offer innovative, attractive and stable investment opportunities that will bring select investor access to ADNOC’s world-class asset base that is both logistically and strategically advantaged and located in an investor friendly environment.
ADNOC will also look to broaden both the range and type of partners it works with, to include, for example, specialist infrastructure and energy investors, long term global investment institutions and other energy, services and petrochemical players, while also deepening its engagement with existing partners.
The new initiative will bring significant benefits to the UAE and its citizens. Most importantly it will create new, high-skilled jobs and attractive career opportunities across all parts of the ADNOC value chain. It is also expected to create greater commercial opportunities for the UAE private sector, SMEs and other ADNOC suppliers and will provide an additional boost to the domestic economy, as well as to the UAE’s own in-country value creation. Lastly, it will also increase foreign direct investment, technology and knowledge transfer into the UAE.
H.E. Dr. Al Jaber said, “We are looking for partners who are forward thinking and fast acting. We want value-add partners who share our values and are willing to contribute both capital and technological expertise for the joint pursuit of new growth opportunities and attractive returns. The ideal partner will bring tangible strategic value to ADNOC, including access to new markets, technical expertise, and a willingness to invest alongside us across our value chain.” He concluded, “Our new partnership model represents an ambitious new direction for ADNOC that will allow us to compete and lead in the new energy era.”
Continued delivery of 2030 Strategy
The past year has seen continued delivery against key objectives of ADNOC’s 2030 strategy. In upstream, ADNOC is adapting to the evolving market environment by maximizing operational efficiencies, increasing crude oil production capacity targets, and reducing costs. ADNOC is also focusing on the application of new and innovative technologies for Enhanced Oil Recovery.
In downstream, ADNOC aims to stretch the margin of each refined barrel of oil and expand petrochemical production from 4.5 to 11.4 mtpa by 2025. It will develop new, high-value products to meet growing demand and increase refining capacity to create new revenue streams. Historically, ADNOC has been a major player in upstream hydrocarbon production. In the years ahead it will significantly increase its focus and resources in downstream – and particularly in refining.
In the gas business, ADNOC will exploit a variety of natural gas sources, including tapping into gas caps and undeveloped deep and sour gas reserves. ADNOC will seek to capitalise on its success and experience in sour gas development as it explores a potential US $20 billion investment to develop the Hail, Ghasha, Delma, Nasr and Shuwaihat fields, which could produce 1.2 Bscfd of gas. It will also increase production from its Shah field to 1.5 Bscfd and explore commercially sound avenues of developing the sour gas fields of Bab and Buhasa. In addition, the company will deploy innovative technology such as Carbon Capture Utilisation and Storage to replace natural gas with C02 in Enhanced Oil Recovery - thereby liberating gas for other purposes.