Adnoc’s new oil trading arm begins operations at ADGM

Abu Dhabi National Oil Company's new oil trading business has begun operations from Abu Dhabi Global Market Square.

The new unit will trade in oil futures as a direct participant, the state oil firm said, moving it away from being a traditional marketer of oil to a global trader, allowing it to take advantage of changing market dynamics. 
"This historic achievement is yet another important milestone for Adnoc as we become a more modern, agile and progressive energy company," Dr Sultan Al Jaber, Minister of Industry and Advanced Technology and Adnoc group chief executive, said. "Our steadfast focus is on providing a better service to our customers, while also stretching the margin from every barrel of oil that we produce, refine and trade. Our move into trading supports both of these goals."

Adnoc has set up two trading units, with Adnoc Trading focusing on crude oil. Another entity, Adnoc Global Trading, set up as a joint venture with Italy’s ENI and Austria’s OMV, is trading refined products.

Adnoc Trading has already begun operations from the Abu Dhabi Global Market, while Adnoc Global Trading is on track to establish the required processes, procedures and systems to begin operations within the coming months.

“The opening of our trading offices at Abu Dhabi Global Market further reinforces its position and reputation as a leading and growing commodities trading hub for our nation and the Middle East region,” Dr Al Jaber said.

“In the weeks and months ahead, trading will become integral to how Adnoc manages its business, helping us to better manage our product flows, deliver greater efficiencies, and provide our customers with a broader service and more integrated solutions,” Khaled Salmeen, executive director of Adnoc’s marketing, supply and trading directorate and chairman of Adnoc Trading, said.

Derivatives are contracts based on an underlying asset in which the buyer and seller agree to a trade at a set price in the future. Trading in oil derivatives is substantially larger than the physical market for oil, with about 2.5 billion barrels per day traded on exchanges, compared to about 100 million physical barrels per day used.

Last year, Adnoc received the green light from the emirate's Supreme Petroleum Council to list Murban on an international exchange, as it looks to change the way it currently prices and trades crude. Murban is Abu Dhabi's flagship crude grade, which flows at approximately 1.7 million barrels per day.