Adnoc to spend Dh400 billion over next 5 years

By Rajive Singh

ABU DHABI 28 November 2017: The Supreme Petroleum Council (SPC), presided over by His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces and Vice-Chairman of the SPC, yesterday approved Adnoc’s key strategic investments program and future opportunities.

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The SPC approved Adnoc’s plans for capital expenditure of over Dh400 billion, over the next five years, as it embarks on its Upstream and Downstream expansion and growth projects. The SPC also approved plans to explore and appraise Abu Dhabi’s unconventional gas resources, as the company seeks to enable future value creation from its untapped gas resources. And, the SPC gave the green light to pursue international downstream investments that will position Adnoc as a global player in the downstream market.

The SPC is the highest governing body of the oil and gas industry in Abu Dhabi. The council formulates, approves and oversees the implementation of Abu Dhabi’s petroleum policy and follows up its implementation across all areas of the petroleum industry to ensure that the set goals are accomplished.

As it accelerates delivery of its 2030 strategy, Adnoc remains on track to expand oil production capacity to 3.5 million barrels a day by the end of 2018, and to improve drilling time by 30 per cent by 2019. Enhanced efficiencies have brought Adnoc’s leading low production cost down even further, a factor driving interest in the upcoming offshore concessions, which have attracted more than 14 potential partners from across the world.

In gas, Adnoc is focused on ensuring a sustainable and economic supply of gas for the UAE’s growing demand. To help achieve this, the company will access undeveloped tight reservoirs, tap into its gas caps and expand sour gas production. In addition, it has commenced an exploration drilling programme to explore for, and appraise, the potential of individual gas deposits in tight reservoirs.

Downstream

Adnoc’s refreshed downstream strategy focuses on additional value creation by pursuing two parallel paths. Domestically, it will leverage and optimize its existing assets, ensure fuel self-sufficiency and diversify and grow its refining, gas processing and petrochemicals business portfolio. At the same time as expanding its UAE-based downstream operations it will pursue international downstream strategic and commercially viable investments, aimed at reshaping Adnoc into a global company, with an adaptable, resilient portfolio, that delivers maximum value to the shareholder and catalyzes the UAE economy.

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In support of its expanded 2030 strategy, Adnoc will grow its crude refining capacity by 60 per cent and more than triple its petrochemical production, to 14.4 mtpa by 2025 through a staged expansion plan aimed at initially optimizing its existing assets to grow and diversify its products portfolio. An aromatics project will convert naphtha, which is currently exported, into gasoline and aromatics and a large project to enhance the crude processing flexibility of its 900,000 bpd refining system will be taken forward.

In chemicals, a new linear alkyl benzene project and a new mixed feed cracker, at Borouge, will enable new value chains to be created. These expansions will make Ruwais the largest integrated refining and chemicals site in the world. When complete Adnoc will convert almost one fifth of its crude to chemicals, diversifying its range of high value products to provide a natural hedge to oil price movements.

IPO

Adnoc recently confirmed plans to offer a minimum 10 per cent stake, or 1.25 billion shares, and a maximum 20 per cent stake, or 2.5 billion shares, in the partial IPO of Adnoc Distribution, its fuel distribution unit. An indicative price range of between Dh2.35 and Dh2.95 per share, has been set. At the top of the range, the IPO would be the largest in the UAE since DP World was floated, 10 years ago.

The proposed IPO, which will be the first time Adnoc has placed shares of one of its subsidiary companies onto the public markets, will offer both UAE and international investors the opportunity to invest alongside Adnoc in one of the region’s leading retail brands.

The other SPC members attending the meeting, at Adnoc’s corporate headquarters, were Sheikh Hazza bin Zayed Al Nahyan, Vice Chairman of the Abu Dhabi Executive Council; Sheikh Mansour bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs; Sheikh Hamed bin Zayed Al Nahyan, Chairman of the Court of Abu Dhabi’s Crown Prince; Sheikh Mohammed bin Khalifa bin Zayed Al Nahyan, member of the Executive Council of Abu Dhabi; Sheikh Dhiyab bin Mohamed bin Zayed Al Nahyan; HSuhail Mohammed Al Mazrouei, UAE Energy Minister, Dr Sultan Al Jaber, Minister of State and Adnoc Group CEO; Hamad Mubarak Al Shamsi, Secretary-General of the SPC; Dr Ahmed Mubarak Al Mazrouei, Secretary General of the Executive Council; Khaldoun Al Mubarak, CEO and Managing Director of Mubadala; Riyad Abdul Rahman Al Mubarak, Chairman of the Abu Dhabi Department of Finance and member of the Abu Dhabi Executive Council; Awaidha Murshed Al Marar, Chairman of the Abu Dhabi Energy Department and member of the Abu Dhabi Executive Council; Abdullah Nasser Al Suwaidi, and Suhail Faris Ghanem Al Mazrouei.