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Cyril Widdershoven

Cyril Widdershoven

Dr. Cyril Widdershoven is a long-time observer of the global energy market. Presently he works as a Senior Researcher at Hill Tower Resource Advisors. Next…

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Abu Dhabi’s Energy Giant Is Preparing For Global Expansion

  • ADNOC has been directed to expand internationally and has already made headlines with its interest in Germany, Israel, and Azerbaijan.
  • In the coming months, Abu Dhabi’s energy giant is likely to make moves in the Eastern Mediterranean and Europe.
  • As well as expanding beyond its own borders, ADNOC is likely to use its proximity to COP 28 to expand its non-fossil fuel energy investments.
energy

Abu Dhabi National Oil Company (ADNOC), one of the largest NOCs around, has been directed to expand internationally. The NOC, already making headlines with its plans to potentially acquire Germany’s Covestro and a major stake in Israel’s NewMed Energy, is now openly going to put in place a direct internationalization strategy, as ordered by the Abu Dhabi Executive Council. According to Abu Dhabi media sources, Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Chairman of the Abu Dhabi Executive Council, has directed ADNOC to “explore further opportunities for international growth”. The directive was issued on September 28th

ADNOC holds an investment budget of around $150 billion (over 5 years) to acquire international assets, with a particular focus on oil and gas production. At present, with the company looking at Absheron (Azerbaijan), NewMed Energy, and Covestro, there is still a vast budget available. Taking into account the increase of crude oil prices globally, and still very high natural gas/LNG prices long-term, that budget could be increased even further. In addition to the international expansion plans, ADNOC is still investing heavily in CO2 and CCUS projects at home, having allotted about $15 billion to the new technology.

In the coming months, it will be very interesting to see how this new directive will be implemented. It is clear that ADNOC has set its eyes on the East Mediterranean. The acquisition of a 50% stake in TotalEnergies’ Egypt operations has opened the door to the region for ADNOC. Both parties have already indicated their intent to expand cooperation further. Considering the new bid rounds just issued by Egypt, it can be expected that ADNOC or its subsidiary will be bidding on some of the blocks. This strategy without any doubt also links to the growing UAE-Abu Dhabi involvement in the Arab world’s largest market and potential major energy exporter to Europe.

On the other hand, ADNOC has been showing a major interest in the European market, as it wants to substitute part of its current oil and gas business with renewables and low-carbon fuels. In recent months, discussions have been held with a long list of European partners and potential customers for ADNOC’s green hydrogen and green ammonia projects. A potential downstream acquisition in Europe is a real possibility, with likely targets in the Netherlands (Rotterdam, Amsterdam) or even Germany. While ADNOC’s main business is still upstream oil and gas, divestments or new opportunities in the North Sea, projects in the Netherlands, Norway, or even the UK, could definitely be interesting for the energy giant. ADNOC’s international expansion can and will most probably involve additional funding of (offshore) wind and solar, targeted via its subsidiary MASDAR. 

Overall, the directive has been clear, and its implementation will not take long. Knowing the rational and structural implementation of Abu Dhabi’s rulers, energy markets should expect fireworks. With ADNOC’s leader Sultan Al Jabr leading COP28, ADNOC’s expansion beyond hydrocarbons is likely to be accelerated. While oil and gas will remain the core business of ADNOC for years to come, combining traditional energy sources with renewables is a win-win situation for the energy giant. ADNOC’s war chest is full, and its international ambition is clear.

By Cyril Widdershoven for Oilprice.com

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