UAE’s ADNOC to venture into privatisation, oil trading

Abu Dhabi National Oil Company (ADNOC) has embarked on a major shake-up plan to privatise its services businesses, venture into oil trading and expand partnerships with strategic investors, its chief executive said on Monday.

The partial privatisation plan marks a major shift by the state energy company that was founded in 1971. It aims to make ADNOC more competitive and commercially focused, operating in way that is more akin to other state-owned controlled peers.

The state firm plans to sell at least 10 per cent of its fuel retail unit, ADNOC Distribution, in an initial public offering (IPO) this year and could float up to 30 per cent in the unit in future, CEO Sultan al-Jaber told Reuters in an interview.

Read: ADNOC listing could raise up to $2.8bn

Other Gulf states, such as Saudi Arabia and Oman, have also embarked on selling energy assets with the slide in oil prices. Saudi Arabia’s state-run oil giant Saudi Aramco plans to list about 5 per cent next year.

Although ADNOC has no plans to list the holding company, it might look at selling stakes in other service companies and would explore new ways to manage its assets, al-Jaber said.

“ADNOC as the holding company will continue to be wholly owned by one shareholder that is Abu Dhabi government,” he said.

“But anything that is currently owned by ADNOC especially companies in the service sector are actually candidates for us to explore where we can unlock and maximise value.”

He said ADNOC aimed to sell at least 10 per cent of ADNOC Distribution, which runs a chain of fuel stations across the United Arab Emirates, and could sell up to 30 per cent in future.

“We have not in any way considered anything more than a potential 30 per cent in the future,” he said. “We will always continue to own a significant majority.”

Sources told Reuters in September that ADNOC could float more businesses, such as National Drilling Company, or energy infrastructure, if the distribution unit IPO was successful.

Al-Jaber did not identify any units earmarked for stake sales but said “not necessarily all are going to go for an IPO.”

“Some will be where we attract a strategic partner or a strategic investor, where we jointly operate and manage this company for some time, and then potentially think of another means of maximising value either through privatisation or through an IPO,” he said.

ADNOC – dubbed “a sleeping energy giant” – has embarked on major changes since al-Jaber’s appointment as CEO last year, part of an economic reform drive led by Abu Dhabi’s Crown Prince Sheikh Mohammed bin Zayed Al Nahyan.

“Our objective here is for us to turn this company into an agile, resilient, forward-thinking, progressive organization… with efficiency and top high performance and profitability set in the core of our business,” al-Jaber said.

ADNOC wants to set up its own oil trading unit, possibly together with an oil major or a big trading house.

“Non-speculative, asset-backed trading is going to be central to our overall trading and value maximisation effort,” al-Jaber said, although no decision had been taken yet on a structure.

“I don’t see us finalising this whole exercise or deciding on the way forward before the end of 2018, early 2019,” he said.

ADNOC said in August it would split its offshore oil concession, due to expire in March 2018, into more than one area with new terms to boost opportunities for partnerships.

Al-Jaber said he expected a decision on the new offshore concessions by early 2018. He said more than 14 foreign oil companies were interested in the concessions.