Abu Dhabi’s Supreme Petroleum Council (SPC) launched, today, a new pricing mechanism for the Abu Dhabi National Oil Company’s (Adnoc), flagship onshore crude oil, Murban, and announced a significant increase in oil and gas reserves and new discoveries in the emirate of Abu Dhabi, at its meeting held at Adnoc’s headquarters.

The SPC meeting was presided over by His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, Deputy Supreme Commander of the UAE Armed Forces, and Vice-Chairman of the SPC.

During the meeting, Sheikh Mohamed conveyed the encouragement and support of The President, His Highness Sheikh Khalifa bin Zayed Al Nahyan, as Adnoc continues to harness energy resources to create long-term and sustainable value for the nation. He commended Adnoc on its strong performance as it delivers its 2030 strategy and highlighted that Adnoc 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 commended Adnoc on its 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 also commended the strategic and historic decision to list Adnoc’s Murban crude oil on an internationally recognised exchange, noting it will 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.

Sheikh Mohamed highlighted Adnoc’s ongoing transformation into a more performance-led and commercially-driven organisation and emphasised the central role Adnoc plays in enabling the UAE’s economic ambitions. He expressed the SPC’s recognition of Adnoc’s efforts to drive foreign investment into the UAE through its approach to strategic partnerships and investments.

Sheikh Mohamed and the SPC also reinforced the importance of a performance-led culture driven by a highly-skilled and qualified workforce. Sheikh Mohamed commended Adnoc on the progress it is making in attracting and developing the talent that will cater for its future growth.

He noted Adnoc has recruited over 3,200 Emirati nationals with advanced qualifications since 2016 and is set to employ an additional 1,258 by the end of 2019, including over 600 Adnoc scholars. He also acknowledged Adnoc’s plans to recruit more than 3,000 additional Emirati nationals over the next few years.

Sheikh Mohamed highlighted Adnoc’s drive to stimulate socio-economic development in the UAE through its In-Country Value (ICV) programme, which created an additional 1,000 private-sector jobs for Emirati talent in 2018 and is expected to grow over the coming years.

The SPC also commended Adnoc for its industry leadership in applying artificial intelligence,AI, and embedding digitisation across its full value chain to increase efficiencies, empower its people and unlock greater value from its resources.

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 achieved.

Other SPC members that attended the meeting are Sheikh Mansour bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs; Sheikh Hamed bin Zayed Al Nahyan, Managing Director of Abu Dhabi Investment Authority; Sheikh Theyab bin Mohamed bin Zayed Al Nahyan, Chairman of Abu Dhabi Crown Prince’s Court;Suhail bin Mohammed Faraj Faris Al Mazrouei, Minister of Energy and Industry; Dr. Sultan Al Jaber, Minister of State and Adnoc Group CEO; Hamad Mubarak Al Shamsi, Secretary General of SPC; Dr. Ahmed Mubarak Al Mazrouie, Chairman of Abu Dhabi Executive Office; Khaldoon Khalifa Al Mubarak, Chairman of Abu Dhabi Executive Affairs Authority, EAA; Jassem Mohamed Bu Ataba Al Zaabi, chairman of the Department of Finance Abu Dhabi; Eng. Awaidha Murshed Al Marar, Chairman of the Abu Dhabi Department of Energy,DoE; Abdullah Nasser Al Suwaidi; and Suhail Faris Ghanem Mazrouei.

In support of Adnoc’s drive to strengthen its marketing, supply, and trading capabilities to deliver greater value while responding to customer needs, the SPC launched a new forward pricing mechanism for Adnoc’s Murban Crude, enhancing the attractiveness of Murban and reinforcing the UAE’s position as a reliable energy provider to the world.

The SPC also approved Adnoc’s new trading strategy, following the incorporation of Adnoc Global Trading in July, a joint venture with Eni and OMV that will focus on creating additional value from the sales and trading of products from Adnoc Refining.

Adnoc will engage with its customers and other stakeholders over the coming months regarding the implementation of its new Murban Crude forward pricing mechanism, which will see it move from a retroactive official selling price,OSP, to market-driven, transparent, forward pricing. The company expects to implement its new Murban Crude forward pricing mechanism between the second and third quarters of 2020.

The new Murban Crude forward pricing mechanism will use a market-driven futures contract as its price marker, enabling customers and the market to better price, trade, and manage their crude requirements. The 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.

Today’s SPC approval also included the lifting of destination restrictions on Adnoc sales of Murban Crude.Murban is the main onshore crude grade of Abu Dhabi and is produced by Adnoc Onshore – a subsidiary of Adnoc – via the Adnoc Onshore Murban Concession. The Murban concession produces approximately 1.7 mmbpd of Murban crude oil. Adnoc is a 60 percent equity shareholder in the Murban concession, with the remaining 40 percent shareholding held by the other concession partners, BP, Total, INPEX of Japan, GS Caltex of Korea, CNPC and ZhenHua of China.

At the meeting, the SPC also announced increases in hydrocarbon reserves of 7 billion STB of oil and 58 TSCF of conventional gas, moving the UAE from seventh to the sixth position in both global oil and gas reserves ranking with a total of 105 billion STB of recoverable oil and 273 trillion SCF of conventional gas. These significant additions to the UAE’s hydrocarbon reserves mark an historic milestone for the country since the last major update of its reserves base three decades ago and underpin its position as a stable and long-term energy provider to the world.

In addition, the SPC announced the discovery of unconventional recoverable gas resources totaling 160 TSCF; a first for the region, ushering in a new era of large scale unconventional hydrocarbon resources development.

The increase in reserves and new discoveries follows Adnoc’s extensive drilling of dozens of new exploration and appraisal wells across Abu Dhabi’s conventional and unconventional oil and gas fields over the past few years. In addition, the start of production in new fields, for example, SARB, Umm Lulu, Haliba, and Bu Haseer, has enabled Adnoc to verify and further upgrade the originally expected reserves’ volumes.

Equally, the ongoing maturation of Adnoc’s field development plans towards its 5 million barrels per day (mmbpd) oil production capacity target by 2030, and expanded oil recovery schemes, as well as ongoing in-fill drilling, have provided the base for an increase in Adnoc’s reserves.

The unconventional and conventional gas discoveries and increase in reserves follow the approval last year by the SPC of Adnoc’s integrated gas strategy that will allow Adnoc, commercially and holistically, to unlock Abu Dhabi’s abundant gas resources to enable the UAE to achieve gas self-sufficiency and potentially transition to a net gas exporter.

The SPC also reviewed the progress of Adnoc’s downstream expansion strategy which is aimed at creating a more valuable Downstream and enabling the company to stretch the dollar on every barrel of crude it produces. In recent months, Adnoc has signed a series of strategic framework agreements in its downstream business to help drive the diversification of its downstream portfolio, secure market access to the new centers of demand, and capture promising downstream growth opportunities in the UAE and internationally.

Over the past 12 months, Adnoc has stepped up the pace of its transformation as it delivers its 2030 strategy. This has resulted in several significant achievements. The company struck a strategic equity partnership with Eni and OMV in its refining business and established a trading joint venture; concluded a landmark midstream pipeline infrastructure partnership with KKR, BlackRock, the Abu Dhabi Retirement Pensions and Benefits Fund,ADRPBF,and Singapore’s sovereign wealth fund, GIC, unlocking almost $5 billion in value; successfully concluded Abu Dhabi’s debut competitive exploration block bid round and launched a second bid round.

In addition, Adnoc awarded LUKOIL a stake in the Ghasha ultra-sour gas concession, marking the first time a Russian company has joined an Adnoc concession; partnered with OCI to form a joint venture fertilizing company, creating the world’s largest exporter of nitrogen fertilizer and acquired a 10 percent stake in VTTI, the global storage terminal owner and operator.

Also, the company was assigned the highest credit rating for any oil and gas company in the world by Fitch Ratings and was named the Most Valuable Brand in the Middle East by Brand Finance.

As Adnoc marked these achievements, it continued to drive its digital transformation and embed advanced technologies such as Artificial Intelligence,AI, Big Data and Blockchain across its business to enhance operational efficiency, drive profitability and unlock new value from its assets and resources.

Guided by its strategic pillars of People, Performance, Profitability, and Efficiency, Adnoc is creating a dynamic corporate culture that optimizes resources, maximizes value and incubates and develops world-class talent.

After the meeting, Sheikh Mohamed reviewed the progress of Adnoc’s development and expansion projects at its headquarters, as well as its other works, such as a water fountain.

He was then briefed about the new facilities of Adnoc’s headquarters and toured a tunnel linking the building’s staff parking area and the main entrance to its northern and southern lobbies.

During the tour, he viewed the modern lighting on the green areas surrounding the building, as well as its new plaza area and the drilling heads and valves used in several oil fields, which all combine the modernity and originality of Adnoc.