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Abu Dhabi announces new gas reserves – News

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New pricing mechanism set for Adnoc crude; to be implemented between Q2 and Q3 2020

Abu Dhabi’s Supreme Petroleum Council (SPC) on Monday announced a significant increase in oil and gas reserves as well as new discoveries that would elevate the UAE from 7th to 6th position in both global oil and gas reserves ranking.

While hydrocarbon reserves rose by seven billion stock tank barrels (STB) of oil, conventional gas stock surged by 58 trillion standard cubic feet (TSCF), and unconventional gas reserve rose by 160 TSCF. On Monday, SPC at its meeting held at Adnoc’s headquarters approved the launch of a new pricing mechanism for the flagship Murban crude as part of the oil giant’s broader transformation strategy.

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, presided over the meeting.

The new boost to oil and gas reserves will move the UAE to sixth place in the global rankings for oil and gas reserves with a total 105 billion STB of recoverable oil and 273 TSCF of conventional gas, Adnoc said.

The UAE, the third-largest oil producer in the Organisation of the Petroleum Exporting Countries behind Saudi Arabia and Iraq, pumps around three million barrels per day, produced mostly by Adnoc.

Sheikh Mohamed commended Adnoc on its strong performance as it delivers its 2030 strategy and highlighted that the oil giant has been able to achieve its operational and financial targets, despite the volatile energy markets, due to its drive to continuously optimise its performance and maximise value from its assets and resources.

Sheikh Mohamed acknowledged Adnoc’s relentless efforts to drive the exploration of Abu Dhabi’s huge hydrocarbon resources which resulted in the historic achievement of significantly increasing its oil and gas reserves, and elevated the UAE from the seventh to the sixth position in both global oil and gas reserves rankings. He noted this achievement reinforces the important role the UAE plays and will continue to play in ensuring the security of energy supplies to global customers.

He said the strategic and historic decision to list Murban crude oil on an internationally recognised exchange would provide the markets with greater confidence and solidify Abu Dhabi’s position as a global energy hub and an essential energy provider to the world, particularly the fast-growing markets in Asia.

Adnoc is expected to implement its new Murban crude forward pricing mechanism between the second and third quarters of 2020. Monday’s approval also included the lifting of destination restrictions on Adnoc’s sales of Murban.

Sheikh Mohamed highlighted Adnoc’s ongoing transformation into a more performance-led and commercially-driven organisation and emphasised the central role the oil major plays in enabling the UAE’s economic ambitions.

Dr Sultan Ahmed Al Jaber, UAE Minister of State and Adnoc Group CEO, said the support of the UAE’s leadership is enabling the company to accelerate the pace of its ongoing transformation into a more commercially-driven and customer-focused integrated energy company with global reach.

“Following the leadership’s wise directives, Adnoc is adopting more creative strategies and more flexible business models, while shaping value-add partnership opportunities to remain resilient and meet operational and financial targets in today’s unpredictable energy markets, as we deliver our 2030 strategy,” said Al Jaber.

Dr Al Jaber said the forward-looking decision to list Murban on an internationally recognised exchange and improve the terms of sale of Adnoc’s Murban Crude, is another significant step in the company’s transformation. “The initiative will enable our customers and other market participants to better price, manage and trade their purchases of Murban. This historic and strategic move cements the UAE, Abu Dhabi and Adnoc’s role in the international oil and gas sector.”

The Murban contract will create an alternative benchmark to the most commonly used Middle East standard, the Dubai/Oman benchmark operated by the Dubai Mercantile Exchange and traded on CME’s electronic platform.

“The Murban futures contract will be traded on an independent and regulated exchange and is expected to demonstrate a highly liquid forward price curve, given the market appetite for Middle East crude,” Adnoc said.

Murban light crude production is around 1.6-1.7 million barrels per day, and is exported from Fujairah on the Gulf of Oman.

For many years, the UAE has traditionally sold oil directly to end-users, mainly in Asia, based on retroactive pricing rather than the forward pricing used by Saudi Arabia, Kuwait and Iraq.

The world’s long-established top benchmarks, Brent crude and West Texas Intermediate, also deal in light crude, and trade at vast volumes.

— issacjohn@khlaeejtimes.com

author

Issac John

Editorial Director of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE’s mainstream journalism for 35 years, including 23 years with Khaleej Times. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.






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