Sheikh Mohammed signals backing for Adnoc strategy
Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, yesterday signalled his backing for the new strategy at Abu Dhabi National Oil Company (Adnoc), under its recently appointed leadership.
In a visit to Adnoc headquarters yesterday, Sheikh Mohammed met Sultan Al Jaber, who was named Adnoc’s chief executive in February, and added to the Supreme Petroleum Council – Abu Dhabi’s top oil wealth decision-making body – at the end of last month, as well as other top Adnoc executives.
Sheikh Mohammed was briefed on the company’s strategic objectives, including the expansion of its petrochemicals and refining capabilities.
The Crown Prince commended Adnoc for focusing on long-term strategic goals while driving operational efficiencies and optimisation “in response to the evolving global energy landscape and market conditions”, according to a statement from Wam.
The comments and visit were taken as signalling his personal endorsement of a new direction for Adnoc, where the state oil company’s chief is seeking to bring on a younger generation of technocratic managers and streamline a large and often cumbersome bureaucracy.
Mr Al Jaber has long been a rising figure as a minister of state and top executive at Abu Dhabi government-owned Mubadala, including chairman of its clean energy arm, Masdar.
He quickly moved to change the guard at Adnoc’s top two divisions, naming Abdul Al Kindy, formerly chief executive of the onshore operating company, Adco, as Adnoc’s head of exploration and production, and Abdulla Al Dhaheri, former head of Adnoc Distribution, the petrol station operator, to run Adnoc’s refining and marketing.
Other key appointments are expected soon.
Mr Al Jaber last week set out some of his guiding principles for the new Adnoc, where he also stressed the need to bring efficiency improvements to the company.
Adnoc, with current oil producing capacity of 3.15 million barrels per day – and a plan to raise it to 3.5 million bpd by 2018 – is the main source of Abu Dhabi’s wealth and one of its largest employers.
One of the biggest challenges facing Adnoc is that many of its units have “a silo mentality,” especially its key operating companies which rely heavily on foreign partners, such as Total, ExxonMobil and BP, and often have conflicts about strategic aims, such as optimising short-term production versus maximum production over the life of oilfields.
“For Adnoc to become more structurally and rationally capable of dealing with the new challenges it needs to restructure the whole Adnoc/Adnoc-Opco apparatus,” said Cyril Widdershoven, a partner at the Dutch consultancy Verocy, who has worked for many years with Andoc and its units.
While management changes are regarded as crucially important, another key change needed is to raise Adnoc’s technical know-how, particularly in strategically important areas such as enhanced oil recovery, according to a number of industry executives.
Adnoc has made some moves to address this, investing US$100 million to put in a new research centre at the Petroleum Institute, but that alone would take too long to meet the immediate need for expertise within the operating companies.
In any case, the Crown Prince’s visit “was meant to underline that the process has begun and has backing from the top”, said an Adnoc executive, who did not want to be named.
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Updated: April 10, 2016 04:00 AM