Addressing industry peers and policy makers at CERAWeek, one of the world’s leading energy conferences, UAE Minister of State and ADNOC Group CEO H.E. Dr Sultan Ahmed Al Jaber said the company is pursuing creative partnerships, as it balances the need for operational efficiency and cost optimization with a smart growth strategy that maximizes value across all its businesses.
“We are keen to collaborate with active, value-add, strategic partners who can complement our existing experience with technology, market access and capital,” H.E. Dr Al Jaber said.
“We seek those who are willing to invest, commit to long-term partnerships and share the risks and benefits, not just across our upstream business, but across the entire value chain, including our marine and services portfolio.”
H.E. Dr Al Jaber pointed to the recent onshore concession agreements, with BP, China National Petroleum Company and CEFC, a Chinese energy investment firm, as examples of how ADNOC is thinking creatively and exploring every possible avenue to establish partnership models that are mutually beneficial and introduce a new dynamic to industry partnerships.
Turning to why ADNOC has embarked on its ambitious transformative journey, H.E. Dr Al Jaber said it was necessary for ADNOC to adapt to a changing energy landscape in order to stay strong and thrive for decades to come, in line with the UAE leadership’s vision to ensure long-term economic growth and a sustainable economy for future generations.
“We have set in motion a transformation that will ensure ADNOC is resilient and remains an important contributor to the economy of the UAE, has a lasting impact on the development of the country and is fit for the future,” he said.
Over the course of the last year, ADNOC has consolidated its offshore operating companies, ADMA-OPCO and ZADCO, and integrated its marine and services businesses, Esnaad, Irshad and ADNATCO.
“We have leveraged significant synergies, streamlined and standardized functions, and drove major operational and cost efficiencies across the ADNOC Group. These efforts have enabled us to achieve substantial reductions in our operating cost per barrel,” he highlighted.
He elaborated on the company’s strategic imperatives focused on delivering a more profitable upstream, a more valuable downstream, ensuring sustainable and economic gas supply, and developing world-class talent.
H.E. Dr Al Jaber explained that at the heart of ADNOC’s evolution into a more commercially focused, performance-led organization are four key pillars: People, Performance, Profitability and Efficiency, underpinned by an unwavering commitment to HSE and asset integrity.
He stressed that People are “the bedrock of ADNOC’s success”, adding: “We are investing in developing the capabilities of our people, giving them the tools to succeed. The oil company of the future will need a broader range of skills than today, and we are doing so by taking advantage of the entire talent pool, both women and men alike.
During the one-on-one plenary dialogue with Pulitzer Prize winning energy economist and Vice-Chairman of IHS Markit, Daniel Yergin, H.E. Dr Al Jaber identified three key energy industry trends that are shaping ADNOC’s growth strategy.
“The first is the surge and shift in global energy demand,” noted H.E. Dr Al Jaber. “Economic growth will drive energy demand up 30 per cent by 2040. That is the equivalent of adding the energy draw of North America and South America combined.
“Most of that growth will come from non-OECD countries and will require an estimated US $25 trillion in new investment,” added Dr Al Jaber. “That is a level of funding no company can deliver on its own. It’s only possible through new and productive partnerships, within the industry, as well as between the public and private sector.”
The second major trend is the technological revolution that is transforming the rate of new discoveries, increasing recovery rates, maximising efficiency and reducing cost around the globe.
“Advanced seismic mapping has enabled further exploitation of reservoirs in North America, offshore Brazil, and transformed the Eastern Mediterranean into a major source of natural gas. Meanwhile, contribution from enhanced oil recovery is anticipated to expand and play a greater role across the industry,” Dr. Al Jaber said.
The third trend, H.E. Dr Al Jaber identified, is the exponential expansion of the petrochemical market. For example, global demand for ethylene-based products, he pointed out, will grow 150 per cent by 2040, mostly driven by emerging economies, primarily India and China. “ADNOC’s 2030 growth strategy focuses on tripling our petrochemical production capacity and diversifying our higher value products in line with this market opportunity,” he said.
H.E Dr. Al Jaber, responding to a question on the growing role of renewable energy, said, “It’s all about the economics of the energy mix. Renewables and hydrocarbons complement, rather than compete with each other. We have seen the price of solar decline to a point where it is price competitive with any other source, especially in our part of the world.
“Today, combining solar power with traditional energy, namely gas, makes perfect economic sense. The more renewables we use, the more we can redirect hydrocarbons to create higher value products.”