ADNOC gets SPC nod for $109bn investments plan

Emirati oil giant to spend AED400bn on growth projects over next 5 years; aims to expand oil production capacity to 3.5mn bpd by the end of 2018, and to improve drilling time by 30% by 2019

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 energy industry of the UAE.
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 energy industry of the UAE.

Abu Dhabi’s Supreme Petroleum Council (SPC), presided over by 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, has approved ADNOC’s key strategic investments programme and future opportunities.

The Emirati oil giant is looking to expand its 2030 strategy, aimed at unlocking, creating and maximising value and ensuring smart growth in its upstream, and downstream businesses, while strengthening market access.

The SPC approved ADNOC’s plans for capital expenditure of over AED 400bn or $109bn, over the next five years, as it embarks on its upstream and downstream expansion and growth projects. The SPC also approved ADNOC’s plans to explore and appraise Abu Dhabi’s unconventional gas resources, as the company seeks to enable future value creation from its untapped gas resources.

The SPC meeting comes at a time when ADNOC has decided to publicly list shares of its retail arm. ADNOC recently confirmed plans to offer a minimum 10% stake, or 1.25bn shares, and a maximum 20% stake, or 2.5bn shares, in the partial IPO of ADNOC Distribution, its fuel distribution unit.

An indicative price range of between AED 2.35 and AED 2.95 per share, has been set. At the top of the range, the IPO would be the largest in the UAE since DP World was floated, a decade ago.

The proposed ADNOC Distribution IPO, which will be the first time ADNOC has placed shares of one of its subsidiary companies onto the public markets, will offer both UAE and international investors the opportunity to invest alongside ADNOC in one of the region’s leading retail brands.

“In line with the SPC’s directives, over the coming years, we will make strategic, commercially-driven and targeted investments, across our entire value chain, aimed at maximising existing resources, while also identifying and developing new, value-enhancing opportunities. We will continue to strengthen our resilience to the changing energy landscape, while remaining focused on managing our unit cost and driving performance, profitability and efficiency across our business.” Dr Sultan Al Jaber, Minister of State and ADNOC group CEO, said.

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“Furthermore, our intention to explore and appraise our unconventional resources, in collaboration with value-add, strategic partners, reinforces ADNOC’s objective to further diversify our hydrocarbon assets base and enable value creation through vast untapped resources. We aim to unlock and deliver material and commercially-viable production from Abu Dhabi’s unconventional resources by 2030, with a focus on gas and gas liquids,” Al Jaber was quoted as saying in the press release.

As it pursues delivery of its 2030 strategy, ADNOC continues to optimise its upstream operations and drive solutions to maximise recovery from its mature reservoirs, while seeking ways to cost effectively unlock the potential of untapped resources and leverage technology economies of scale to keep the operating cost per barrel at the most competitive level.

It remains on track to expand oil production capacity to 3.5mn barrels per day (bpd) by the end of 2018, and to improve drilling time by 30% by 2019. Enhanced efficiencies have brought ADNOC’s leading low production cost down even further, a factor driving interest in the upcoming offshore concessions, which have attracted more than 14 potential partners from across the world.

In gas, ADNOC is focussed on ensuring a sustainable and economic supply of gas for the UAE’s growing demand. To help achieve this ADNOC will access undeveloped tight reservoirs, tap into its gas caps and expand sour gas production.

In addition, it has commenced an exploration drilling programme to explore for, and appraise, the potential of individual gas deposits in tight reservoirs. ADNOC utilises industry best practice, drives targeted technology application and will invest in the future development of untapped unconventional resources, over the next five years.

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ADNOC is also investing on its workforce. It has introduced more robust development programmes, for women and youth, designed to provide greater on the job training and mobility opportunities.

With an eye to the future, it has created the ADNOC Future Leaders programme, a scheme by which ADNOC will provide its high performing young employees with the knowledge, skills and experience necessary to be successful at the highest levels of the organisation.

Delivery of ADNOC’s expanded 2030 strategy builds on three important changes it has made to the way it operates. It has expanded its approach to partnerships, to capitalise on growth opportunities, enhanced its capital structure, to more smartly finance its business, and revised the way it manages its portfolio of assets, to drive performance and unlock lasting value.

Following their meeting, SPC members visited ADNOC’s Thammama sub-surface collaboration centre, which uses advanced technology to enable the smart decision making necessary to optimise the organisation’s performance, drive efficiencies and rationalise costs, across the organisation. The centre is integrated with ADNOC’s Panorama Digital Command Centre, which was inaugurated earlier this month by H H Sheikh Mohamed.

Through Thammama, ADNOC is using smart analytics and is adopting Artificial Intelligence platforms to solve subsurface challenges and to help unlock more challenging resources and optimise field development plans, as well as reduce drilling time and manage production capacity across its operations.

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