Strategic priorities in Abu DhabiSeptember 7, 2020
H.E. Dr. Sultan Ahmed Al Jaber, minister of industry and advanced technology and ADNOC Group CEO, talks to The Energy Year about how the Group is ensuring business continuity during the crisis and the significance of ADNOC’s recent USD 20.7-billion gas pipeline investment deal. ADNOC is active across all parts of the oil and gas value chain.
What steps has the ADNOC Group taken to ensure business continuity and enhance operational efficiency in light of the Covid-19 pandemic and the downturn in oil prices?
Our ability to effectively navigate this challenging period comes down to the fact that we are realising the benefits of the transformation we started four years ago, at the direction of the UAE’s leadership. And in fact, these unprecedented times have highlighted just how forward-thinking our leadership’s guidance was in driving a comprehensive transformation at ADNOC.
Through our transformation, we have concentrated on improving our performance and strengthening our agility, while continually reinforcing efficiency throughout our business. Most importantly, we have focused on what we can control, which is our costs, and, regardless of the situation, this focus on costs won’t change. As a result, we’ve managed to remain resilient through this downturn, while also still delivering against our strategic priorities.
With regards to the pandemic, our number one focus has been the health, safety and wellbeing of everyone across our business and this safety-first approach is very much in line with the UAE’s overall response to Covid-19, which has prioritised the health and safety of everyone living here. Basically, we have deployed a “test early and test often” approach to managing the pandemic.
At ADNOC, we have taken extra precautions to enhance the safety of our employees, including comprehensive testing and minimising staff on-site. And finally, we emphasise personal responsibility, empowering each and every employee to be safety leaders, as we believe that individual behaviour is the first and best line of defense against this disease.
How has ADNOC’s Panorama Digital Command Centre contributed to helping the Group optimise production, swiftly respond to changing market dynamics and deal with the current crisis’ impact on international demand?
Our Panorama Digital Command Center is a key part of our ongoing strategic investments in digitisation and artificial intelligence to enable us to drive greater efficiencies, optimise performance, and respond to complex market dynamics with agility and speed, as we deliver on our 2030 smart growth strategy. It acts as our “eyes on the ground” and has proven to be a very valuable asset in navigating the Covid-19 situation and the fast-evolving market dynamics. In fact, it has generated over USD 1 billion in business value since its inception three years ago.
The access to real-time data and analysis provided by Panorama enables simulations and scenario planning and plays an important role in ensuring business continuity. That said, Panorama is just one of many digital initiatives we have introduced over the past four years. The fact is, the modern oil company is absorbing, embedding and applying cutting-edge technology at every step of the production process.
At ADNOC, we are committed to a path of continuous improvement by embedding the latest technologies across our value chain to enhance our efficiency and maximise our performance. Predictive analytics is helping to significantly reduce our maintenance costs and avoid system failures. Big data is accelerating our decision-making in volatile market conditions. And blockchain is generating valuable efficiencies by transforming how we track the transaction of every hydrocarbon molecule we produce, from first oil to final sale.
What is the importance of ADNOC’s recent landmark USD 20.7-billion gas pipeline infrastructure investment deal? What benchmark can this transaction set for large-scale energy infrastructure investment into the UAE going forward?
Our USD 20.7-billion deal highlights ADNOC’s and the UAE’s ability to continue attracting global tier 1 institutional capital as well as strategic foreign direct investment. This deal, which at the time was the world’s largest energy infrastructure deal for 2020, is a powerful testament to Abu Dhabi’s and the UAE’s position as a highly trusted and attractive investment destination. It is another vote of confidence from capital markets, following our USD 5-billion infrastructure deal last year with BlackRock, KKR, GIC and the Abu Dhabi Retirement Pensions and Benefits Fund (ADRPBF).
This landmark transaction sends a strong signal to other potential partners from around the world that ADNOC and the UAE continue to be open and ready for business. The UAE has created a safe, reliable and stable business environment, underpinned by a robust regulatory framework and a unique partnership model, and the opportunity is huge for investors to capitalise on the world-class profile of the UAE’s energy assets and infrastructure base, and their low-risk and stable income-generating profile.
Going forward, we will continue to develop and explore additional investment opportunities across our value chain that provide an attractive risk-return profile to high-quality long-term investors.
What objectives has the ADNOC Group set out for expansion in the petrochemicals industry and what role will the recently formed joint venture with ADQ Holding play in stimulating investments in the sector?
Our partnership with ADQ is another milestone in ADNOC’s Downstream 2030 smart growth strategy, which we launched in 2018. The joint venture creates a new investment platform to fund and oversee the development of industrial projects within the planned Ruwais Derivatives Park, a key enabler of our downstream strategy and the UAE’s chemicals and industrial growth strategy. The agreement expands on our existing efforts to maximise the value of our assets in Ruwais, support the transformation of Ruwais into a dynamic, global hub for downstream activity and accelerate the development of our petrochemicals and derivatives industry here in the UAE.
Since we launched our downstream strategy in 2018, we have attracted significant foreign investment and expanded our downstream partnership base across our refining, fertiliser and pipeline assets.
At the same time, we have successfully progressed large-scale capital projects in Ruwais to further stretch the margin of each barrel of oil produced, including the Crude Flexibility Project, our flagship refinery upgrade programme. The project, which is over 70% complete, will enable the processing of crudes other than Murban, and, in turn, unlock more robust crude export optionality while increasing the value we derive from every barrel of oil by boosting refining margins.
As we deliver on our downstream strategy, we will continue to develop a robust pipeline of investment and partnership opportunities and welcome investors who are ready to partner with us and capitalise on our existing world-class infrastructure, high quality, competitive feedstock, and excellent geographic location to drive sustainable growth.
What are the key takeaways for NOCs around the world from the ongoing supply and demand crisis for the global oil and gas industry? What steps has the ADNOC Group taken to further develop domestic manufacturing and local capabilities amid disruptions across the global supply chain?
Our industry will have to remain cautious and nimble as we adjust to the multiple structural macro-economic changes taking place around us. This requires us to focus on the things we can control, which are our cost and efficiency. As I mentioned, this is what we have been doing at ADNOC. Our strategic aim is to always be one of the lowest-cost producers in the world. As we work to maintain this position, we are prioritising in-country value creation across all our contracts and projects to enable industrial development and support the growth and diversification of the UAE’s economy.
Our In-Country Value programme underpins this entire effort. To date, the programme has driven more than USD 12 billion back into the UAE economy and created over 1,500 private-sector jobs for UAE nationals since it was launched in January 2018. We are building on the momentum of the success of this programme to encourage private-sector partnerships, catalyse socio-economic development, improve knowledge transfer and generate skilled jobs for UAE nationals. Ultimately, everything we do at ADNOC is focused on delivering greater sustainable value for the UAE.