Sultan Al Jaber, UAE minister of state and chief executive of Abu Dhabi National Oil Company, has revealed further details of his ambitious strategy to make the government-owned company a world leader in the energy sector.
The plan involves streamlining operations across all of Adnoc’s activities in an effort to drive efficiency, performance and profitability in the business. It will also involve establishing a new commercially-oriented mindset in Adnoc’s 55,000 employees.
The goal is to ensure Adnoc remains a central contributor to the UAE economic diversification strategy and performs on a par with any multinational company, with focus squarely on shareholder value, Mr Al Jaber told The National.
A gas master plan has begun to align upstream and downstream gas operations across 18 businesses to secure effective implementation, following the decision to rebalance the amount of gas being re-injected to make more available.
Demand for natural gas in the UAE has been rising rapidly – about 6 per cent a year – and the country has had to import an increasing amount since 2008.
“A focus will be placed on ensuring we provide a sustainable and economical supply of gas through an integrated gas master plan,” he said.
Another major focus of the new strategy is the upstream operation, which Mr Al Jaber has identified as one of the areas in which Adnoc needs to maximise profitability.
“For example, in group procurement we are looking to leverage our purchasing power and improve the efficiency of our operations by optimising inventory and working capital,” he said.
“We will also be more economically minded in the smarter use of crude oil. Murban- our flagship product- is sold on the market at a premium, so instead of using it in the refining process we are exploring how to replace this valuable resource with offshore blended crude instead,” he explained.
The strategy is also aimed at creating value to Adnoc’s downstream business. “We are exploring how to align and create more synergy amongst our downstream operations, how best to maximise the use of our resources and to produce new petrochemical products,” Mr Al Jaber added.
The group’s new focus is in part a result of the changed market conditions following the fall in the price of crude oil from historic highs in the summer of 2014, and reflects Adnoc’s role as a key wealth generator and a driver of the diversification plan laid out in the Economic Vision 2030.
Mr Al Jaber’s plan — which has been delivered to Adnoc executives in the first hundred days since he was appointed chief executive in February — will be implemented progressively in the coming years in what has been described internally as a “journey to the future” for Adnoc.
Benchmarking practices have been introduced, using best practice industry standards on the key criterion of operating cost per barrel (opex). The vital opex benchmark has been built into the performance contracts of Adnoc entities and the senior executives that run them.
The new strategy will also make Adnoc business units more accountable, and help them to adhere to international best practice. But the company is not believed to be considering an initial public offering of its holding company or any business units on stock markets, an Adnoc source said.
The introduction of aligned key performance indicators across the company, as well as encouraging national talent, is seen as especially significant within Adnoc, underpinning the whole strategy, ensuring that performance and commercial criteria are “hard wired” into the company and its employees across all its operations.
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