Abu Dhabi National Oil Company (Adnoc) signed an agreement to sell base oil to Europe as the firm looks to increase its product market share globally as part of a strategy to grow downstream.
The state oil company signed the agreement with Swiss trader Chemlube to sell base oil - a crude product used in the lubricant industry that also finds uses in high-performance engine oils. Adnoc declined to comment on the volumes expected to be sold to Europe.
"The signing of the European sales agreement and the launch of the ADbase brand underline Adnoc's commitment to achieving the best commercial value from its crude and petroleum products, through innovative and competitive marketing strategies, expansion of our client base and penetration of new markets," said Abdulla Salem Al Dhaheri, marketing, sales and trading director at Adnoc.
ADBase refers to Adnoc’s flagship base oil brand.
The agreement follows the start-up of Adnoc's 500,000-tonne capacity base oil plant in Ruwais last year. Gulf state oil companies like Adnoc and Saudi Aramco have increasingly fine-tuned their strategy to sell more products to offset output restrictions, in place since Opec and allies convened in 2016 to lower global crude inventories and prop up prices. The UAE's current spending programme of $109 billion over the next five years, includes a significant push towards enhancing downstream assets at home and abroad.
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Adnoc, which has made some spot sales of base oil also sells the product to the UAE and GCC markets through its distribution unit, which has its own blending facility, an Adnoc spokesman said.
The firm could also potentially sell base oil, which it manufactures using Murban - Abu Dhabi's flagship light, highly paraffinic crude - to Asian markets should opportunities arise, he added.
In January, the Abu Dhabi firm signed a three-year long-term deal to supply a million tonnes of naphtha to Malaysia's Lotte Chemical Titan and signed similar contracts with Thai and Japanese companies, a shift from earlier short-term deals.
Saudi Aramco also in January was said to have signed a swap pact with Mediterranean refiners to exchange its crude for refined products, as it sought to enter the European market, Bloomberg reported.
