ADNOC Group to continue its transformation

Following a year of major changes at the Abu Dhabi National Oil Company, ADNOC, and its group of companies, further improvement lies ahead, according to the Group Chief Executive Officer, Dr. Sultan Ahmed Al Jaber.

Dr. Al Jaber, who is also a UAE Minister of State as well as a member of Abu Dhabi's Supreme Petroleum Council, is quoted by the daily Abu Dhabi-based 'The National' today as saying that, "Under the guidance of the Abu Dhabi leadership, we have collectively decided that ADNOC has to evolve to simply meet the realities of the paradigm shift we have experienced in the energy sector We cannot be in denial about the changes taking place."

Since taking over as CEO early in 2016, Dr. Al Jaber has made wholesale changes to ADNOC's top layer of management while a number of changes to the group's structure have been announced, including the merger of its two key offshore operating subsidiaries, ADMA-OPCO and ZADCO, as well as shipping and ports companies.

He told 'The National' that ADNOC plans to adopt a different approach to partnerships in order to meet ambitious targets for the group's five-year business plan and long term strategy.

"Our model of engagement is changing," he was quoted as saying. "We are going to be more open for more business partnerships and more investors. [But] we are only looking for strategic, value-add investors and partners."

Last month, ADNOC announced an agreement with international oil major BP, under which the company would take a 10 percent share in the onshore oil concession operated by the Abu Dhabi Company for Onshore Petroleum Operations, ADCO, an ADNOC subsidiary, in exchange for issuing BP shares worth around US$ 2.2 billion.

This deal, Dr. Al Jaber told the paper, "is one example of how we are changing our operating model."

"Now it is going to be across the board – in the upstream, in the midstream and in the downstream," he was quoted as saying. "We will aggressively pursue downstream opportunities, whether it is refining or petrochemicals or fertilisers," he added, noting that ADNOC would be looking for partners who would "secure the market."

Referring to current world demand both for crude oil and for oil products, Dr. Al Jaber noted that "the fastest growing market today is Asia, it is a fact."

He went to say that "we want to set a new model for ADNOC," 'The National' reported.

"We want to make sure that our revenues are not dependent only on what the market price [of crude] is ... That is why we are aggressively pursuing more gas, more refining and more petrochemicals," he was quoted as saying.

The most ambitious part of the production expansion plans for the ADNOC Group is in petrochemicals, where output is set to grow from 4.5 mtpa last year to 11.4 mtpa by 2025.

Seeking to implement these targets, while at the same time meeting its cost-cutting objectives, has meant that some fundamental changes had to be made in a hurry, Dr. Al Jaber noted. He also pointed out that in the past, "Technology was somewhat under-estimated" in ADNOC Group operations.

"The introduction of technology into how we run our business helped in a big way to reduce our cost," he told 'The National'.

"At the same time, we have introduced new methodologies and approaches and policies for our procurement and inventory strategies that also have made significant contributions to reducing cost. Also, we resized [the] organisational structure."

From the outset, the ADNOC CEO told 'The National', there has been a desire to learn from the experience of its industry partners.

"What I wanted to do from day one is [to] build on our partners’ expertise and knowledge, the BPs, Exxons, Shells, Totals and JODCOs of this world," the paper quoted him as saying.

"The beauty of this exercise is [that] it allows us to integrate the best from each organisation."

"It is difficult for them to adopt what their competitors are doing, [but as a state oil company] we learned from all, we took all those lessons and integrated them all into one model and this is what we hope for ADNOC to become."

Dr. Al Jaber concluded by expressing his confidence that further improvements can be achieved.

"Is there more room for improvement? Yes. We just got started and I am confident that there is more room for improvement."