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Adnoc decision ensures UAE’s ability to diversify economy

The decision of the Abu Dhabi National Oil Company to both expand and possibly offer an IPO on minority stakes in some of its service sectors is a move that will boost the country’s economy and help ensure access to the world’s fastest growing markets. Such a move was inevitable as the Shale Revolution and resulting falling oil prices have impacted the revenue of most oil-producing countries. But rather than complacently face the new energy era, Adnoc’s proactive moves will ensure both its own success and the ability of Abu Dhabi to continue to utilise its natural resources well into the future. While Adnoc has provided a limited overview of the company’s new direction so far, most of the announcements have focused on the oil and gas sector. The company has indicated it will develop a fully-integrated drilling company, which should provide more jobs in the country and make future oil concessions to foreign-owned national oil companies less necessary.

Adnoc also announced that it will also look at developing its downstream business, which will create new partnership and investment opportunities. These new partnerships will have the potential to “co-invest strategically across different parts of a more integrated Adnoc value chain” the company said, which means Adnoc will able to offer investment opportunities that are “both logistically and strategically advantaged and located in an investor-friendly environment” and bring in greater foreign investment. This should create greater commercial opportunities for the UAE’s private sector, helping to boost the domestic economy. That Adnoc will also focus on bringing more technology via knowledge transfers into the UAE will also boost the ability of the company to grow its services.

“The ideal partner will bring tangible strategic value to Adnoc, including access to new markets, technical expertise, and a willingness to invest alongside us across our value chain,” said Dr Sultan Al Jaber, UAE Minister of State and the Adnoc Group’s chief executive officer. Adnoc said it is also looking at partnerships that will secure better access to the world’s fastest-growing markets and capitalise on key trends in the energy industry. Despite the rise in renewable energy and the decrease in demand for fossil fuels, many emerging economies in Asia still view oil and gas as an energy source critical to its development, which is why the UAE’s strategic oil deals with India are so critical, as ensuring assess to the developing economies in Asia will be critical to the future of energy companies.

Making these moves now should be a priority, as foreign oil producers such as Canada, the US and Russia are also beginning to focus on Asian demand. That Adnoc had the foresight to ensure its presence in these markets early should be noted and praised. Their decision gives the UAE the opportunity and the time necessary to continue its economic diversification away from petrochemicals.

About Marc Mcilhone

Marc Mcilhone is ArabBrains' Editor - sourcing news and features content and overseeing the work of the site’s contributors. Marc’s work is informed by his technical background in architecture having worked for some of the UK’s leading practices on projects within the education, healthcare and housing sectors. Marc has a particular interest in how innovators are creating sustainable solutions that have a positive impact on people’s everyday lives. Please email press releases and news to: editor@arabbrains.com

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