ABU DHABI / WAM
The Abu Dhabi National Oil Company (Adnoc), signed on Wednesday a comprehensive strategic framework agreement with the Federal State Budgetary Organisation “Russian Energy Agency” by the Ministry of Energy of the Russian Federation (REA), to explore new opportunities for collaboration across the oil and gas value chain.
The agreement highlights the strength of the UAE-Russia bilateral relations and underpins Adnoc’s expanded approach to partnerships that is enabling it to unlock and maximise value across its entire portfolio.
Under the terms of agreement, Adnoc and REA will jointly explore opportunities for collaboration in relation to Abu Dhabi’s exploration and production concessions. This potential for collaboration in relation to Abu Dhabi’s exploration and production concessions builds on the momentum of the successful conclusion of Abu Dhabi’s debut competitive exploration and production bid round. It also recognises Abu Dhabi’s abundant untapped oil and gas resources and the UAE’s stable and trusted business environment.
In addition, the two partners will jointly assess strategic opportunities for collaboration in the downstream sector, including refining and petrochemicals opportunities in Abu Dhabi and internationally. This cooperation complements Adnoc’s strategy to create a more valuable downstream business as drives its downstream expansion plans and stretches the dollar from every barrel of oil it produces.
Adnoc and REA have also agreed to explore potential opportunities for collaboration in marketing sales and trading projects in Abu Dhabi and internationally. Adnoc is developing its global marketing, supply, and trading platforms to better optimise and commercialise its assets and product flows to deliver greater value from its operations.
Adnoc and REA will also evaluate collaboration opportunities in the liquefied natural gas (LNG), sector that could unlock value and drive revenue growth.
“This agreement with REA closely aligns with our core strategic objectives to create a more profitable upstream, more valuable downstream, a more sustainable and economic gas supply, and more proactive and adaptive marketing,” said Abdulmunim Saif Al Kindy, Adnoc Upstream Executive Director.
The framework agreement will see Adnoc and REA explore potential opportunities for collaboration in relation to technical and operational support exchanges in artificial intelligence and other advanced technologies that can help optimise performance and drive efficiencies.
In August, the company acquired a 10 percent equity stake in VTTI BV, the global storage terminal owner and operator, providing it with better access to customers around the world and enabling it to respond more quickly to market dynamics while capturing trading value throughout its entire supply chain.
At the heart of Adnoc’s downstream expansion strategy is a $45 billion investment plan aimed at creating the world’s largest integrated refining and petrochemicals complex in Ruwais, located in the Emirate of Abu Dhabi, which will see the company triple production of petrochemicals to 14.4 million tonnes per annum by 2025.
Al Kindy said, “The wise leadership of the UAE and Russia have enabled close, and friendly relations between both countries and Adnoc is taking advantage of this strong bond to build new relationships with partners in Russia that can drive new commercial opportunities as we deliver our 2030 strategy. This agreement with REA closely aligns with our core strategic objectives to create a more profitable upstream, more valuable downstream, a more sustainable and economic gas supply, and more proactive and adaptive marketing.
“The comprehensive scope of the agreement and the unique capabilities of REA send a strong signal that Adnoc is ready and willing to engage with value-add partners that can help unlock and maximise value across our full value chain, for mutual benefit. We see significant potential for a successful partnership and look forward to further developing this framework agreement.”
A key pillar of Adnoc’s 2030 smart growth strategy is its expanded approach to partnerships and strategic investment, which is enabling it to drive efficiencies, improve performance, secure access to new centers of global demand, and unlock new and greater value from its resources and assets. As part of this new approach to partnerships, Adnoc has broadened its investor base to include specialist infrastructure and energy investors, long-term global investment institutions, and other players in the global energy, services, and petrochemicals sectors.
Zhdaneev said, “Russia and the United Arab Emirates are among the largest producers and exporters of hydrocarbons in the world. The signing of the agreement with ADNOC creates a long-term foundation for the wide range cooperation in the field of energy in general and the oil and gas sector in particular. The new agreement opens up new promising areas for partnership between our countries; thanks to that, together, we will be able to foster technical and operational support exchanges including upstream and downstream operations, and collaborate in the areas of petrochemicals and LNG opportunities. We are confident that our cooperation, also in the context of deploying the Energy Strategy of the Russian Federation until 2035, is well-positioned for further development.”
The REA was established in 2009 and provides scientific, analytic, and technological support in the field of fuel and energy complex, as well as conducts research on scientific and technological problems in the energy industry for the Russian Federation.
The Russian Federation has the largest natural gas reserves and the seventh largest oil reserves of any country in the world. Last year, bilateral relations between the UAE and Russia were strengthened when Sheikh Mohamed bin Zayed and President Vladimir Putin signed a Declaration of Strategic Partnership to cooperate in various sectors such as politics, security, economy, and culture. In 2018, bilateral trade between the UAE and Russia topped AED11 billion ($3 billion), a 21 percent increase on the previous year.