The United Arab Emirates is refashioning state-owned Abu Dhabi National Oil Company (ADNOC) in the image of an international oil major by stepping up its global expansion and finding new revenue streams to maximise earnings for the Gulf state. Like Gulf neighbours Saudi Arabia and Qatar, the UAE wants to exploit its fossil fuel resources while there is still strong demand for oil and gas and to spend the revenue on diversifying its economy to lessen its dependence on hydrocarbons.
As part of this strategy, ADNOC told Reuters it was actively pursuing select opportunities in the areas of renewable energy, gas, petrochemicals and liquefied natural gas (LNG), without giving details of any specific targets. Two people with knowledge of the matter said the company was on the hunt for LNG assets in Africa and was considering buying Galp’s 10% stake in a multi-billion-dollar natural gas project in the Rovuma basin off the coast of Mozambique.
ADNOC declined to comment and Galp did not respond to questions from Reuters. ADNOC has already been busy on the deal front this year. It bought a stake in an Azerbaijani gas field, has put in an offer with BP (BP.L) for a stake in Israeli gas producer NewMed Energy (NWMDp.TA), has opened takeover talks with German plastics maker Covestro (1COV.DE) and is looking to create a $20 billion chemicals giant with Austria’s OMV (OMVV.VI).
The state-owned company also told Reuters it was investing in energy trading, without giving further details. Reuters reported last year that ADNOC was set to open a trading office in Geneva and a representative office in London. “As part of our international growth strategy, we are focused on expanding our presence in renewables, gas, LNG and chemicals, and are actively pursuing select opportunities, while also investing in and growing our trading capabilities,” an ADNOC spokesperson said in response to written questions.
ADNOC has two trading arms, both set up in 2020: ADNOC Trading, which is focused on crude oil, and ADNOC Global Trading, a joint venture with Italy’s Eni (ENI.MI) and OMV which is more focused on refined products.
OIL MAJOR
While ADNOC’s deal-making dates back to 2017 when it listed its fuel distribution unit, the pace of change accelerated after a board meeting in November chaired by UAE President Mohammed bin Zayed. The board brought forward to 2027 plans to up production capacity to 5 million barrels per day and also approved a five-year business plan and capital spending of $150 billion.
“The thinking is to move away from a traditional state oil firm model to more like an IOC (international oil company),” a source with knowledge of the matter said.
The transformation at ADNOC is similar to ongoing changes at state-owned energy giants in Saudi Arabia and Qatar. The national energy champions – ADNOC, Saudia Arabia’s Aramco (2222.SE) and QatarEnergy – drive their economies but were traditionally focused on oil and gas production at home.
Now, as the transition to renewable energy accelerates, the timeline is shortening for these so-called national oil companies (NOCs) to monetise their reserves and they are also doubling-down on opportunities further afield. To propel its changes, ADNOC has hired more than 3,370 staff, including 28 senior managers, so far this year from companies such as global energy firms, trading houses, banks and consultancies, according to data on employment network LinkedIn. LinkedIn data shows ADNOC’s headcount is up 13% this year, and by a quarter over the past two years, to about 32,750. The actual number, however, which ADNOC has never disclosed, is now over 40,000, one person familiar with the matter said.
“As we continue to grow our business, we are creating exciting opportunities for our talented workforce as we accelerate the transformation, decarbonisation of and future-proof our company,” the ADNOC spokesperson said in response to questions about hiring.
