Abu Dhabi's Adnoc bets on global expansion

The UAE is refashioning state-owned Abu Dhabi National Oil Company (Adnoc) in the image of an international oil major by stepping up its global expansion and finding new revenue streams.

As part of this strategy, Adnoc told Reuters it was actively pursuing select opportunities in the areas of renewable energy, gas, petrochemicals and liquefied natural gas (LNG).

Two people with knowledge of the matter said the company was on the hunt for LNG assets in Africa and was considering buying Galp’s 10 per cent stake in a multi-billion-dollar natural gas project in the Rovuma basin off the coast of Mozambique.

Adnoc has already bought a stake in an Azerbaijani gas field, has put in an offer with BP for a stake in Israeli gas producer NewMed Energy , has opened takeover talks with German plastics maker Covestro and is looking to create a $20 billion chemicals giant with Austria’s OMV.

The state-owned company also told Reuters it was investing in energy trading. “As part of our international growth strategy, we are focused on expanding our presence in renewables, gas, LNG and chemicals, and are actively pursuing select opportunities, while also investing in and growing our trading capabilities,” an Adnoc spokesperson said in response to written questions.

Adnoc has two trading arms, both set up in 2020: Adnoc Trading, which is focused on crude oil, and Adnoc Global Trading, a joint venture with Italy’s Eni and OMV which is more focused on refined products.

While Adnoc’s deal-making dates back to 2017 when it listed its fuel distribution unit, the pace of change accelerated after a board meeting in November. The board brought forward to 2027 plans to up production capacity to 5 million barrels per day and also approved a five-year business plan and capital spending of $150 billion. “The thinking is to move away from a traditional state oil firm model to more like an IOC (international oil company),” a source with knowledge of the matter said.

The transformation at Adnoc is similar to ongoing changes at state-owned energy giants in Saudi Arabia and Qatar.

The national energy champions - Adnoc, Saudia Arabia’s Aramco and QatarEnergy - drive their economies but were traditionally focused on oil and gas production at home.

Now, as the transition to renewable energy accelerates, the timeline is shortening for the national oil companies (NOCs) to monetise their reserves and they are also doubling-down on opportunities further afield.

To propel its changes, Adnoc has hired more than 3,370 staff, including 28 senior managers, so far this year from companies such as global energy firms, trading houses, banks and consultancies, according to data on employment network LinkedIn.

“Adnoc wants to expand in Europe, whether it was through Gunvor or organically,” a source with knowledge of the matter said. “Now that the Gunvor deal is off the table, it will focus on organic growth.”