SMART GROWTH

Abu Dhabi 2019 | ENERGY | INTERVIEW

TBY talks to Dr. Sultan Ahmed Al Jaber, CEO of ADNOC Group, on expanding further into the downstream segment, the significance of its Derivatives and Conversion Parks, and the implications of its ICV program.

Dr. Sultan Ahmed Al Jaber
BIOGRAPHY
Dr. Sultan Ahmed Al Jaber is a Minister of State in the UAE Cabinet and CEO of the ADNOC Group. As Minister of State, he is responsible for a number of economic, political, development, and social files of the UAE. Before entering government, he developed a specialized expertise in energy and infrastructure, beginning his early career at ADNOC. He established Masdar and served seven years as its CEO. In 2016, while retaining the chairmanship of Masdar, he returned to ADNOC as its CEO. Dr. Al Jaber holds a PhD in business and economics from the UK, as well as BSc in chemical and petroleum engineering and an MBA from the US.

Following the announcement of an investment to expand its downstream capacity, what will be the key steps for ADNOC Group in developing opportunities across the refinery and petrochemicals segment?

It is an exciting time for our downstream business. We are on track to expand our refining and petrochemicals production by building on the existing strengths and competitive advantages of the Ruwais Industrial Complex.
With select partners, we plan to invest AED165 billion (USD45 billion) over the next five years to turn the complex into the world's largest and most advanced integrated refining and petrochemicals hub. This will enable us to increase our range and volume of high-value downstream products, secure better access to growth markets around the world and create a manufacturing ecosystem in Ruwais that will significantly stimulate in-country value creation, private sector growth and employment.

Plans are well advanced to expand the Ruwais complex's refining capacity by more than 65%, or 600,000bpd by 2025, through the addition of a third, new refinery, creating a total capacity of 1.5 million barrels per day (mbpd). The new refinery, coupled with the crude flexibility project, will significantly increase the capability, flexibility and output of Abu Dhabi's refining operations by adding to the range of crudes that can be processed and that in turn enables the export of increased volumes of the high-value Murban crude.

The expansionary investment program will also see the entire Ruwais complex upgraded to increase its flexibility and integrated capabilities to produce greater volumes of higher-value petrochemicals and derivative products. It includes a plan to build one of the world's largest mixed feed crackers, tripling petrochemical production capacity from 4.5 mtpa to 14.4 mtpa by 2025.

How will the Abu Dhabi hydrocarbon industry benefit from ADNOC's new downstream strategy and how will it drive growth and diversification of the wider economy?

By 2025, our downstream strategy will add over 15,000 jobs, contribute an additional 1% to GDP per year, and create multiple opportunities for new businesses to be formed and grow alongside us, as we develop a new, large-scale, manufacturing ecosystem in Ruwais through the creation of new petrochemical Derivatives and Conversion Parks. It will also create significant in-country value, as our domestic and international partners work more closely with local SMEs to maximize the use of local products, manufacturing and assembly facilities, services and infrastructure.

The Derivatives Park will act as a prime catalyst for the next stage of petrochemical transformation by inviting partners to invest and produce new products and solutions from the growing range of feedstocks available in Ruwais.
This will create numerous new petrochemical activities and value chains, including construction chemicals, oil and gas chemicals, surfactants, and detergents.

At the same time, the Conversion Park will act as a catalyst for focused industry clusters that can not only supply products and solutions, using the derivatives and other facilities available, but will also leverage the proximity of such an interconnected ecosystem to drive expertise, innovation, and entrepreneurship.

What was the driver behind the licensing strategy that saw the six new onshore and offshore blocks in Abu Dhabi open up for competitive bid, and what will be the implications of such a decision for the upstream segment of the industry?

The licensing strategy represents a major advancement in how Abu Dhabi unlocks new opportunities and maximizes value from its hydrocarbon resources. It is also consistent with ADNOC's approach to expanding strategic partnerships across all areas of the business, as we develop and apply new strategies to realize the full potential of our resources, maximize value and accelerate the exploration and development of new commercial opportunities.

Based on existing data, estimates suggest the new blocks hold multiple billion barrels of oil and multiple trillion cubic feet of natural gas. Some of the blocks already have discoveries, and within the combined area there are 310 targeted reservoirs from 110 prospects and leads. In addition to the country's conventional oil and gas accumulations, some of the offered blocks also contain significant unconventional resource potential.
The production of oil and gas from the licensed blocks will make a significant contribution toward achieving our 2030 strategic objectives of a more valuable upstream and the delivery of an economic and sustainable gas supply.

As a result of ADNOC Group's introduction of the In-Country Value (ICV) program for its suppliers, what role do you see the program playing in the UAE economy and what long-term benefits will it deliver?

Our ICV program seeks to stimulate private sector partnerships and opportunities resulting from our 2030 growth strategy, catalyze socioeconomic development, improve knowledge transfer, and create additional skilled employment for UAE nationals.
Our planned capital expenditure across the entire value chain over the next five years will create multiple opportunities for local companies to form and grow alongside ADNOC, as international companies work with local SMEs to maximize the use of local products, manufacturing and assembly facilities, services, and infrastructure. We will also work closely with our suppliers to ensure the success of the program.

As one of the backbones of the UAE economy, ADNOC provides the stimulus for economic growth, supports GDP diversification, and drives employment. Our ICV program will further strengthen our partnerships with the local private sector and drive even more opportunities for local businesses to benefit and grow alongside us, as well as employment opportunities for Emiratis. It is a win-win situation for the nation, the economy, our suppliers, and ADNOC.

What is the importance of pursuing alternative financing strategies, despite disposing of a solid balance sheet?

The careful and prudent choice of alternative sources of financing represents a smarter and more efficient use of our resources and capital. It sets us on the path to becoming a more commercially minded company.
These new financing initiatives will enable us to explore an expanded range of compelling options for the long-term strategic financing of our operations.

The USD1.5-billion capital restructure of ADNOC distribution and the issuance of the USD3-billion Abu Dhabi Crude Oil Pipeline (ADCOP) bond, in addition to other financial instruments, are tangible examples of how we are proactively managing our asset base, especially our infrastructure assets, while being smarter with the deployment of capital.
These transactions demonstrate our ability to unlock value from our portfolio of assets and our ability to design and execute innovative and alternative operating and financing models across our business.