WASHINGTON, D.C.--(BUSINESS WIRE)--Abu Dhabi National Oil Company (ADNOC) Group CEO and UAE Minister of Industry and Advanced Technology H.E. Dr. Sultan Ahmed Al Jaber sees a “robust return of oil demand” but advises that industry must remain “cautiously optimistic” as it adjusts to “multiple structural macroeconomic changes” around the world in the latest edition of CERAWeek Conversations.
In a conversation with IHS Markit (NYSE: INFO) Vice Chairman Daniel Yergin, Al Jaber discusses current energy market dynamics; initiatives to grow valued-added domestic industries—including a recent $20 billion-plus mega-infrastructure deal; priorities to advance next-generation AI, IoT, and machine learning technologies; the widespread adoption of renewables in the UAE; the country’s competitive position in the energy transition as a low cost, low carbon producer and more.
The complete video is available at: www.ceraweek.com/conversations
Interview Recorded Tuesday, August 11, 2020
(Edited slightly for brevity only)
Watch the complete video at: www.ceraweek.com/conversations
- On ADNOC’s corporate resilience in 2020:
“We have started realizing the benefits and the upside of the transformation we started about four years ago. We have concentrated our efforts on improving our performance, strengthening our agility, while of course ensuring that we reinforce efficiency throughout the value chain of our business.
“Throughout this whole exercise we focused on what we can control, which is simply our costs. We don’t control anything beyond our boundaries of our business like the price of oil, so our focus throughout has been on cost. As a result, we have been able to manage the situation, maneuver throughout the different dynamics of the market, and remain resilient through this downturn while also delivering against our strategic objectives and priorities.”
- On health policies and safety protocols amid the pandemic:
“One of the reasons we have come through this period in relatively good shape is our well-founded and our well-established focus on what we call at ADNOC the “100% HSE” (health, safety and environment). This safety-first approach is in fact very much in line with the UAE’s overall response to the pandemic. What we have done is deployed a test early and test often approach to managing the pandemic.
“The UAE has so far has carried out more than 5.5 million COVID tests. That is easily the highest per capita ratio in the world. At ADNOC, we have taken extra precautions to enhance the safety of our employees and our colleagues, and that included the comprehensive testing and minimizing staff on-site. We did not allow for any disruptions to our operations and that is due to the very strong, well-founded HSE culture across our operations.”
- On oil market dynamics:
“The fact is that no one is in a position to predict what the shape of economic recovery will look like in the long-term. There are multiple variables. On the positive side, the market has clearly tightened in the last two months. This happened because of the fact that economies have begun to reopen. The approach of OPEC and its leadership also helped build confidence in the markets. And as a result, we are seeing a robust return of oil demand. This is mainly coming from China. Having said that, our industry will have to remain cautious and nimble. They will need to continue their focus on cost and being cautiously optimistic as we adjust to the multiple structural macroeconomic changes taking place around us today in the world.”
- On ADNOC’s investment strategy and the value proposition of the UAE:
“In simple terms, our investment strategy remains the same. It continues to focus on unlocking value. Looking at every opportunity across the value chain, making smarter use of our capital and more proactively managing our assets.
“This past June we completed a $20.07 billion energy infrastructure investment deal. That transaction, which is going to be the largest of 2020. Just last week we created a shipping joint venture with China’s Wanhua chemicals, with the purpose of having this new JV act as our vehicle to transport LPG to growth markets.
“We see some of the biggest opportunities right here at home presented by ADNOC where we are making smart investments to expand our operations, especially in the downstream and the refining and petrochemical business as well as derivatives, and this is mainly to drive the UAE’s industrial growth and to increase the in-country value. The prime example of this is our recently formed and announced joint venture with one of our largest Abu Dhabi holding companies ADQ.
“The opportunity here is just huge. We are providing a unique value proposition whereby we capitalize on our existing world class infrastructure, high-quality competitive feedstock and of course our excellent geographic location to drive sustainable growth. This is an open invitation from ADNOC, from the UAE, to the investment community to come and engage with us in an open dialogue and to identify new investment opportunities in the downstream business of oil and gas. We will soon be sharing with the investment community a number of investment opportunities in the downstream area.”
- On the mandate of the Ministry of Industry and Advanced Technology:
“This new ministry was established to help support our national agenda to diversify the economy by empowering and enabling industrial growth and value retention. It will focus on industries of strategic importance to our national economy and our national agenda with the aim to promote in-country value while helping create new jobs as well as export-driven companies that will help drive industrial development.
“At the core of our mandate in this ministry is the Fourth Industrial Revolution—specifically the synergies between industry and technology, including machine learning, the Internet of Things, automation, and digitization. Similar to ADNOC, this new ministry will extend an open invitation to all those around the world that want to explore partnership opportunities with the UAE and its different institutions. The strategic objectives of this new ministry represent a natural extension of the work we’ve been carrying out at ADNOC over the past four years. We have been enabling the industrial development of the UAE by going further downstream and prioritizing in-country value across all of our procurement and new contracts as well as all of our new projects while we have been adopting new, very advanced technologies and digitizing our value chain.
“The new ministry will help bridge the gap between the energy, manufacturing, and high-tech sectors to accelerate the comprehensive economic development and the efforts of diversifying the UAE economy.”
- On breakthrough technologies that ADNOC and the UAE are prioritizing:
“Today we are in an era where breakthrough technologies from artificial intelligence, blockchain, big data, and predictive analytics are delivering fast and unprecedented progress for humanity. We have seen through this entire COVID experience that the digital economy has become central. Some new technologies have been introduced only in the past six months that have helped reshape how economies are structured. The UAE not only understands the critical impact of this transition but is in fact directing investment in that space. We have created the world’s first AI-dedicated institute here in Abu Dhabi, The Mohamed bin Zayid University of Artificial Intelligence which will enroll its first intake of students this coming January. There is significant potential for AI-inspired technology to help push the frontiers of progress across multiple sectors, particularly in the oil and gas industry.
“At ADNOC, we are embedding the latest technologies across our value chain of our business that have helped already enhance efficiency, maximize our performance and help enhance our profitability across the business. We are also using predictive analytics to help reduce our maintenance costs. And big data is accelerating our decision-making process in such volatile market conditions.
“We are very excited about the potential of CCUS (carbon capture, utilization and storage) to help reduce carbon emissions. We already capture 800,000 tons of carbon for enhanced oil recovery and we do have real plans to expand our CCUS network and capacity to five million tons per year. This will be fundamental in ensuring that we are one of the most carbon efficient oil and gas companies in the world.”
- On the proliferation and improving price dynamics of renewable energy:
“We have been a long-standing supporter of a diversified energy mix. We believe it makes perfect economic sense to invest in all forms of energy. We were the region’s first mover in promoting, adopting, and investing an advanced energy, like renewable energy and clean technologies. We are already home to two of the world’s largest solar projects: Noor Abu Dhabi and the Mohammed bin Rashid Al Maktoum Solar Park in Dubai. Very recently we just announced plans to create the world’s largest solar project here in Abu Dhabi—a two-gigawatt facility that will help double the capacity of our two previously largest projects.
“In total, we have launched renewable energy projects totaling almost 13 gigawatts in the UAE and across 25 countries around the world. Just last month, the UAE became the first Middle Eastern, first Arab country to begin operations for a nuclear power plant. Later this year the Barakah nuclear power plant will begin delivering safe, commercial, zero-carbon energy to homes throughout the United Arab Emirates. That is a big achievement that we are very proud of.
“Solar energy has been around for a very long time. What has been really missing over the years was capital and ability to scale-up the technology to help increase its efficiency and reduce its cost. That’s exactly what happened. By applying large capital and large-scale projects you were able to advance the technology and bring the costs down. We are a partner to many companies around the world whereby we engage with them in some research and development projects as well as investing in some of the technologies that have helped reduce the costs and enhance the efficiency of such solar parks.”
- On the future energy mix and ADNOC’s strength as a low-cost producer:
“We have to come to terms with the realities on the ground. It is clear that no single source of energy can meet long-term global energy demand. Even in the most fast-paced transition scenarios, oil and gas will still provide over half of the world’s energy. This presents us with the key challenge of how to produce more energy with fewer emissions.
“This challenge plays to one of ADNOC’s strategic advantages, because we are not only one of the lowest-cost producers, but among the lowest carbon producers in the oil and gas industry. This combination of low-cost and low carbon gives us in the UAE a distinct competitive edge. Our goal is to remain best-in-class in sustainability and maintain our position among the world’s lowest carbon emitters. The world is going to need oil and gas for some considerable time to come. It is up to us as oil and gas producers to deliver that energy as responsibly and as sustainably as possible.”
About CERAWeek Conversations:
CERAWeek Conversations features original interviews and discussion with energy industry leaders, government officials and policymakers, leaders from the technology, financial and industrial communities—and energy technology innovators.
The series is produced by the team responsible for the world’s preeminent energy conference, CERAWeek by IHS Markit.
New installments will be added weekly at www.ceraweek.com/conversations.
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A complete video library is available at www.ceraweek.com/conversations.
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