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Some of the world’s biggest oil groups are increasingly on the defensive, as investor pressure on climate change forces them to pull out of dirtier companies and funnel cash to greener energy.
But Sultan Al Jaber, head of Abu Dhabi’s national oil company, makes no apologies for ramping up crude production – and is ready to step in.
“We see the writing on the wall and see the desirability of decisions made by other companies,” he told the Financial Times.
Mr. Jaber has a singular vision: to increase the production capacity of the United Arab Emirates – already Opec’s third largest producer – from around 3 million barrels of oil per day in 2016 to 5 million b / d of by 2030.
“We will not leave any opportunity non-existent,” he said. “We are continuing our exploration programs, identifying proven reserves, increasing production, and wherever we can, we will attract strategic partners.”
The position is particularly hard, given that Mr. Jaber also counts the role of climate czar among his various government positions. Abu Dhabi owns the vast majority of UAE’s oil, which generates 42% of the capital’s revenue.
He insisted that UAE crude – among the cheapest to extract – would be needed even in a world that is moving away from fossil fuels. And unlike some world leaders in the petroleum industry who believe demand may have peaked, he expects global consumption to return to 105 million bpd by 2030, more than its levels. high before the pandemic of about 100 million bpd.
“We are a long-time player,” Jaber said. “The future will require more oil and more hydrocarbon resources. . . Being the cheapest producer will always give us a competitive advantage. “
The partners of Adnoc support Mr. Jaber’s strategy.
“This excess oil supply at the moment is not going to last,” said Vicky Hollub, managing director of Occidental Petroleum, which has an exploration deal with the Gulf group. Given the rapid recoveries in China and India, the global rollout of coronavirus vaccines, and the recent lack of investment from many other companies, “this is going to cause an oil shortage and Sultan.” . . understand that ”.
In the short term, Mr. Jaber’s production ambitions run counter to the supply restriction displayed by OPEC and its allies. The 23-member alliance – of which the United Arab Emirates is a part – agreed last year to cut production to a record 9.7 mb / d as demand plummeted.
The country faced allegations late last year that it was not complying with its share of cuts, which Opec delegates attributed to a divergence in the state oil company’s targets. and the obligations of the Ministry of Energy.
People familiar with the talks claim that senior leaders in Adnoc have been pushing to quit Opec, arguing that the UAE’s production quota is unfairly low. They say the country needs to maximize its production to generate higher profits in order to move towards non-oil economic growth.
Mr Jaber, however, said the UAE had done more than needed and was “still fully committed” to the supply reduction agreement. But he stressed that the “interim” brakes were not at odds with Adnoc’s long-term goals.
He realizes that society will not be spared by growing opposition to fossil fuels and that it needs to strengthen its finances at a time when demand for oil may peak. “We have to be the cheapest and the least carbon emitting,” he said.
The company is looking for partners to develop expertise in carbon capture technologies and hydrogen energy. The green expansion follows the conservative institution’s radical opening up to foreign capital as a way to generate cash and cut costs since Jaber took over in 2016 in the aftermath of the 2014 oil shock.
Whether it’s floating its retail arm or attracting global capital in pipeline infrastructure, Adnoc has since attracted $ 65 billion in foreign direct investment, including more partners. industries that help reduce costs.
In his latest moves, he hired banks, including MUFG, to sell a stake to foreign investors in a $ 2-6 billion project to connect the oil company’s offshore production facilities to the onshore power grid at the ‘using submarine cables, people briefed on the transaction said. Credit Suisse has been aligned to sell a stake in the Adnoc power plant at its Ruwais refinery complex in a deal valued at more than $ 1 billion, they added. Adnoc, MUFG and Credit Suisse declined to comment.
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“Before 2016, we were seen as a black box for most sophisticated financial institutions – it was a missed opportunity,” Jaber said.
Bruce Flatt, chief executive of Brookfield Asset Management – which is part of a consortium that invested in the country’s gas pipelines last year – said overseas partners were reassured because Mr. Jaber “has lived up to the challenge. everything he said ”.
The purpose of the deal, Jaber said, is “to stretch the value” of every barrel of oil and to help diversify beyond oil to Abu Dhabi and the United Arab Emirates. Sheikh Mohammed bin Zayed al-Nahyan, crown prince of Abu Dhabi and de facto ruler of the United Arab Emirates, said in 2015 that the right investments would allow the federation to celebrate its latest shipment of export crude.
Bayo Ogunlesi, chairman of the IPTF, who also invested in the gas pipeline deal, said Jaber was a “tough but fair” negotiator.
Trained in a regular public school, Mr. Jaber began his career with Adnoc, which awarded him a scholarship to study in the United States. He then obtained a doctorate.
“As a young boy growing up in the United Arab Emirates, the dream job for my generation was to work for Adnoc,” he said.
Taken from the obscurity of engineering in the limelight of Mubadala, the sovereign wealth fund then tasked with diversifying the emirate’s economy, Mr. Jaber then launched Masdar, the renewable energy initiative of Abu Dhabi.
Since then he has become an indispensable technocrat at the highest levels of government, known for brushing aside the intricacies in his determination to make changes for Sheikh Mohammed.
The overhaul of Adnoc has solidified his reputation as a man who gets things done.
The restructuring included aggressive cuts to a bloated workforce, a move that drew criticism from those who were used to a job for life.
Jaber said he was determined to modernize a company where, like many state-owned companies in the region, job opportunities and promotions often rely as much on patronage as on talent.
“We are instilling a culture based on high performance, ensuring that meritocracy takes shape in a critical business like Adnoc,” he said – just one part of a multi-faceted strategy to make the company sustainable. company. This is already bearing fruit.
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