and Gas companies that drive efficiencies, value and commercial excellence, will be the ones to come out on top as producers wrestle with low oil prices, UAE Minister of State and ADNOC Group chief executive said at the opening of a major industry event.
“While we cannot predict the future price of oil, one factor remains well within our control and that is the cost of every barrel we produce,” H.E. Dr. Sultan Ahmed Al Jaber reiterated pressure on cost cutting at the oil and gas exhibition ADIPEC 2016.
“In this new energy era we must reflect on how to make the most of our resources, enhance our performance and find new ways to be more competitive,” he said.
Benchmark Brent crude plunged from more than $115 a barrel in June 2014 to less than $28 in January this year, and traded below $46 on Monday. The decline has forced oil and gas explorers to delay projects, cancel billions of dollars of investments and eliminate thousands of jobs.
The industry has slashed capital spending from about 700 billion dollars in 2014 to 400 billion in 2016, according to Total chief executive Patrick Pouyanné.
Wood Mackenzie forecast the international oil companies to slash investments by $370 billion until 2017-end, while $100 to be cut in Sub-Saharan Africa alone over the next five years.
By driving efficiency and leveraging synergies, oil and gas companies can succeed in the new energy era, Al Jaber stressed, but sound, strategic, targeted investments are equally important to enable sustainable growth.
“Time and again, our industry has shown it can engineer around obstacles, create ground breaking solutions and catalyze human progress,” Al Jaber said. “Today’s new energy landscape calls on us to once more to break from old conventions and welcome new paradigms. By embracing the new energy era, we will thrive and we will shape our future.”
He highlighted the example ADNOC Group has adopted to take charge of its own future to ensure resilience and long-term prosperity.
ADNOC Strategy 2030
Under its new 2030 strategy and five-year business plan, ADNOC will diversify and increase production of its petrochemical portfolio, while opening new markets to ensure sustained profitability. It also intends to expand its refining capacity to meet growing demand for refined products.
“We will stretch the margin from every barrel we produce,” said Al Jaber. “And by taking full advantage of our geography, at the pivot point between East and West, we will capitalise on the world’s fastest growing markets, including Asia, where oil demand is expected to increase 15 per cent and the market for petrochemicals is set to double by 2030.”
Al Jaber stressed innovative forms of collaboration are needed in order to maximize success in the new energy era.
“To fully unlock those opportunities, we require a new model of partnership across the industry, one that creates real and tangible value by bringing technology, experience, resources and market access to the table,” Al Jaber said.
“At ADNOC we are focused on growth and we are open for business,” he added.
Abu Dhabi’s Supreme Petroleum Council approved ADNOC’s new 2030 strategy and five-year business plan last week, which seeks to deliver a more profitable upstream, more valuable downstream and a more sustainable and economical gas supply.