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04 November 2019
MARKETS

Abu Dhabi announces plans to start futures contract for Murban crude

Most Arabian Gulf grades, including those of Saudi Arabia, are priced off the Dubai and Oman benchmark for Asian exports, off Brent-related indices for European exports and US indices for US shipments.

BLOOMBERG/CHRISTOPHE


Abu Dhabi’s Supreme Petroleum Council (SPC) has approved the launch of a new pricing mechanism for Abu Dhabi National Oil Company’s (ADNOC) Murban crude, as part of the company’s broader transformation strategy.

In a tweet Sheikh Mohammed Bin Zayed Al Nahyan, the Crown Prince of Abu Dhabi, said, “With the blessing of UAE President, the Supreme Petroleum Council made a historic decision to list on ADNOC’s Murban crude oil on an exchange, strengthening Abu Dhabi’s position as a global energy player.”

Abu Dhabi also reported significant increases in its oil and gas reserves. ADNOC produces around 1.7 million barrels a day of Murban, its best and most abundant grade.

The UAE, the third-largest oil producer in the Organisation of the Petroleum Exporting Countries behind Saudi Arabia and Iraq, pumps around three million barrels per day, produced mostly state-owned Abu Dhabi-based ADNOC.

Most Middle Eastern producers price their crude based on the Oman and Dubai benchmarks. The Murban futures contract would set prices for physical sales of the grade.

Until now, ADNOC has set the price for its four crude grades retroactively, one month after shipping the barrels. The company produces Murban from onshore fields, unlike its other grades—Umm Lulu, Das and Upper Zakum—which it pumps at offshore deposits.

Bloomberg reported that ADNOC may try to set up a trading platform for the new contract in Abu Dhabi with Intercontinental Exchange. The oil company plans to persuade international oil companies and traders to take minority stakes in the new exchange

The SPC also commended ADNOC on its strong operational and financial performance despite the volatile energy markets due to its drive to continuously optimise performance and maximise value from assets and resources.

Over the last two years, the state-owned oil company has expanded its strategic partnership and co-investment model, creating new investment opportunities across all areas of its value chain.

The state-oil company entered a series of strategic equity partnerships across its value chain in the last twelve months.

These transactions include a $5 billion pipeline infrastructure investment with BlackRock, KKR & Co. as well as the Abu Dhabi Retirement Pensions and Benefits Fund and the Singapore sovereign fund, GCI.

Dr. Sultan bin Ahmad Sultan Al Jaber, UAE's Minister of State and ADNOC Group CEO, said, “We are making sizeable investments downstream to create within the UAE, one of the largest refining and petrochemical complexes in the world—this will provide the foundation for fully integrated derivatives and manufacturing hub located at the gateway to the most promising growth markets.”


RELATED STORIES: SUPREME PETROLEUM COUNCIL ADNOC ADNOC OIL PIPELINES ORGANISATION OF THE PETROLEUM EXPORTING COUNTRIES DR. SULTAN BIN AHMAD SULTAN AL JABER


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