The Abu Dhabi National Oil Company (ADNOC) announced that one of its new trading entities, ADNOC Trading, has started derivatives trading as a direct market participant. This represents a major milestone for the company, as it moves from being a traditional marketer of its products to a more sophisticated global trader.
ADNOC has incorporated two trading units, ADNOC Trading (AT), which focuses on the trading of crude oil, and ADNOC Global Trading (AGT) a joint venture with ENI and OMV that will focus on the trading of refined products. The new offices of both AT and AGT are located in Abu Dhabi’s International Financial Centre at Abu Dhabi Global Market (ADGM).
ADNOC Trading is now operational and ADNOC Global Trading is on track in establishing the required processes, procedures and systems to begin operations in the coming months. The AGT trading team are already optimizing ADNOC’s flows (crude, feedstock and product optimization), and, as its new trading systems are finalized will ramp up its activities.
By entering trading, ADNOC is able to offer a broader range of services to its customers and capture more value through new revenue streams from the sale of its growing crude and refined products portfolio. This significant step is a critical enabler of ADNOC’s 2030 strategy and its drive to become a more commercially-driven and performance-led organization.
H.E. Dr. Sultan Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology and ADNOC Group CEO, said: "This historic achievement is yet another important milestone for ADNOC as we become a more modern, agile and progressive energy company. Our steadfast focus is on providing a better service to our customers, while also stretching the margin from every barrel of oil that we produce, refine and trade. Our move into trading supports both of these goals.
“The opening of our trading offices at Abu Dhabi Global Market (ADGM) further reinforces its position and reputation as a leading and growing commodities trading hub for our nation and the Middle East region.”
HE Ahmed Ali Al Sayegh, UAE Minister of State and Chairman of Abu Dhabi Global Market, said: “We congratulate ADNOC on the auspicious launch of their trading operations, and setting another major milestone as they continue to unlock new potential and opportunities to further the UAE economy. We are pleased that ADNOC Global Trading and ADNOC Trading have chosen ADGM as their home base and warmly welcome the teams to the ADGM family. As an International Financial Centre, ADGM is committed to supporting ADNOC and Abu Dhabi institutions in their strategic development and future endeavors via our financial and business platforms. We will work closely together as one entity to propel the economic growth of Abu Dhabi and the UAE well into the future.”
The opening of its trading offices further demonstrates ADNOC’s resilience in overcoming the unprecedented challenges of the COVID-19 pandemic.
Khaled Salmeen, Executive Director of ADNOC’s Marketing, Supply and Trading directorate and Chairman of ADNOC Trading said: “ADNOC has continually adapted during COVID-19 to deliver on its commitments to domestic and international customers, including our landmark move to forward pricing of Abu Dhabi crudes. In 2020, our plans for ADNOC Trading and ADNOC Global Trading become a reality. In the weeks and months ahead, Trading will become integral to how ADNOC manages its business, helping us to better manage our product flows, deliver greater efficiencies, and provide our customers with a broader service and more integrated solutions.”
Safeguards are in place to oversee and track all trading activity. The trading systems used by AGT and AT have undergone thorough testing to ensure that they are ‘air-tight and water-tight’ before operations begin. In order to manage and control risk, the expert trading teams use a suite of energy trading and risk management systems that cover the full life cycle of every trade.
The establishment of ADNOC’s new trading entities is part of the company’s broader transformation in its customer-facing Marketing, Supply and Trading directorate (MS&T). ADNOC’s marketing arm is moving from a supplier that customers historically collected products from, to a more customer and market-centric, shipping & integrated logistics, storage and trading organization. By better integrating its marketing related companies and capabilities, ADNOC will provide a broader service to its customers, better manage and optimize its product flows and ultimately deliver greater value to its customers, its shareholders and the UAE.
In shipping, ADNOC Logistics & Services (ADNOC L&S) is the largest, fully integrated logistics and shipping company in the UAE and provides highly specialized services that cover the entire oil and gas supply chain. ADNOC L&S is expanding its merchant fleet in line with ADNOC’s growing upstream and downstream portfolio and the company’s move into trading.
In storage, in addition to substantial storage in the UAE and international storage in Japan and India, ADNOC announced in 2019 a strategic investment in global storage terminal owner and operator VTTI BV (VTTI). VTTI is an independent global owner of 15 hydrocarbon storage terminals across 14 different countries, many of which are in locations that are complementary to ADNOC’s trade flows.
Finally, by entering trading, ADNOC will be able to provide a wider offering to its customers, more nimbly take advantage of changing market dynamics, and better manage its product flows, assets and risks.