Page 4 - DMEA Week 31

DMEA CommentaRy DMEA
ADNOC’s busy year continues
ADNOC has gone on the offensive following licence awards and selling stakes in mid- and downstream subsidiaries
middle east
What:
ADNOC has acquired
a stake in global storage rm VTTI, while announcing plans to enter India’s lubricant market.
Why:
The moves t within ADNOC’s strategy of diversi cation and expansion both at home and overseas.
What next:
Talks remain ongoing regarding ADNOC and Aramco’s planned collaboration to build a mega downstream complex in India.
Abu Dhabi National Oil Co. (ADNOC) has announced strategic moves this week as the company seeks to increase its market share out- side the uAE.
e news was highlighted by the company’s acquisition of a 10% stake in global storage ter- minal owner and operator VTTI. This move ts within the company’s strategy of expansion throughout the value chain both at home and in Asia and follows the announcement last week that the rm’s retail arm was intending to enter the Indian lubricant market.
storage intent
Storage has been an area of interest for ADNOC for some time and the rm has been strategic in its selection of partners.
In February, it revealed that work was under- way under a $1.2bn engineering, procurement and construction (EPC) contract awarded last year to South Korea’s SK Engineering & Con- struction for a 42mn barrel underground crude storage facility at Fujairah. e eastern emirate has the key advantage of being located outside the crowded Strait of Hormuz.
An agreement to store up to 6.29mn barrels at the Kiire oil terminal in southern Japan has been in place since 2009. Meanwhile, a memorandum of understanding (Mou) was signed in Novem- ber with Indian Strategic Petroleum Reserves Ltd (ISPRL) to consider taking space in the new Padur cavern in the southern state of Karnataka. ISPRL completed the process of lling a 5.86mn barrel allocation at the nearby Mangalore facility during the same month.
Tellingly, in announcing the VTTI deal, ADNOC said: “by expanding its international storage capabilities and reach, ADNOC will move closer to its customers, allowing it to be more agile and [to] respond quickly to market needs and dynamics.”
Following the conclusion of ADNOC’s pur- chase, VTTI will be owned 10% by ADNOC, 45% by IFM Global Infrastructure Fund and 45% by Vitol. ADNOC noted that VTTI owns 15 hydrocarbon storage terminals in 14 countries, holding a total storage capacity of 60mn barrels, which it said was “in locations that are comple- mentary to ADNOC’s trade ows”.
ADNOC CEO and uAE Minister of State H.E. Dr. Sultan Ahmed Al Jaber said: “As one of Fujairah’s largest storage operators, VTTI is a natural partner for ADNOC. is investment further strengthens ADNOC’s strategic position in Fujairah and supports the continued devel- opment of Fujairah as a strategic hub for our operations.”
Retail
ADNOC’s retail arm ADNOC Distribution this week confirmed its intention to enter India’s lubricant market during the third quarter, while also planning to add more domestic fuel stations.
Speaking to the Emirates newspaper The National, ADNOC Distribution’s chief operating o cer Mohamed Al Hashimi said: “We might have some announcements this year, in terms of at least by the end of Q3, we’d be able to give on the lubricants side.” He added: “We’re assess- ing all those options and we continue to nd and search for that one pathway into the Indian market,” he added. Hashimi noted the growing importance of lubricants to ADNOC Distribu- tion and said that entering new lubricant mar- kets presented an opportunity to increase sales overseas.
“It doesn’t take a massive amount of capital to take the base oils or lubes to market ... So these shelf spaces are quite saturated, otherwise the ADNOC brand is well known, but the further and further you go from the uAE, the strength of the brand starts to weaken and that’s a huge factor in expanding shelf space aggressively,” he said. Hashimi said that during the second half of
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Week 31 08•August•2019