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Adnoc marks a milestone as Murban crude futures start trading

Issac John /Abu Dhabi
issacjohn@khaleejtimes.com Filed on March 29, 2021
Ahmed Ali Al Sayegh said IFAD is the first derivatives exchange established in Abu Dhabi. It is also the first time that Abu Dhabi’s flagship Murban crude will be traded as a futures contract and establishing itself alongside global price benchmarks. — Supplied photo

Sheikh Mansour bin Zayed witnesses the launch of ICE Futures Abu Dhabi and ICE Murban Crude Oil Futures contract at ADGM; ICE Futures Abu Dhabi (IFAD) is the first international derivatives exchange in Abu Dhabi and ADGM

Abu Dhabi National Oil Company (Adnoc) marked a milestone in its remarkable growth story on Monday as it started trading of the UAE flagship crude oil, Murban, as a futures contract.

With the launch of future trading on the new Intercontinental Exchange Futures Abu Dhabi (IFAD) commodities exchange, Murban — a light crude that accounts for half of the UAE oil output — joins the ranks of other leading benchmark include Brent and the US West Texas Intermediate in pricing and trading oil.

This historic and strategic milestone reinforces the UAE and Abu Dhabi’s status as a leading global energy hub and underscores Adnoc’s central role as a catalyst to empower the UAE’s economic ambitions, Adnoc said in a statement.

The launch event at Abu Dhabi Global Market (ADGM), was attended by Sheikh Mansour bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs.

“This historic decision falls within the strategy of the UAE and the vision of the wise leadership, which aims to increase the economic achievements and consolidate the honorable position of the UAE and its leadership on the global competitiveness map, and in support of its leading role internationally in the oil market, as a basic resource, in order to ensure the continuation of distinguished development successes,” said Sheikh Mansour.

Also present were Suhail bin Mohammed Al Mazrouei, Cabinet Member and Minister of Energy and Infrastructure; Khaldoon Khalifa Al Mubarak, Group CEO and Managing Director of Mubadala Investment Company; Jassim Mohammed Buatabh Al Zaabi, Chairman of the Department of Finance; Awaidha Murshed Ali Al Marar, Chairman of the Abu Dhabi Department of Energy; Khalifa Al Suwaidi, Chairman of ICE Futures Abu Dhabi (IFAD), in addition to representatives of partner companies.

The oil giant said the introduction of the world’s first Murban Futures contract is the latest step in its ongoing transformation into a more market and customer centric organisation.

By making Murban freely traded crude, similar to Brent or WTI, customers have better price transparency, flexibility to hedge and manage risks and increased access to Murban crude. For Adnoc, its flagship crude grade becomes more available to a broader set of market participants around the world.

Alongside ICE and Adnoc, nine of the world’s largest energy companies and traders are joining IFAD as founding partners. This includes BP, GS Caltex, INPEX, ENEOS, PetroChina, PTT, Shell, Total and Vitol. Representatives from the partner companies joined today’s launch event at ADGM, many participating virtually from around the world.

In attendance also were Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology and Adnoc Managing Director and Group CEO, said the historic achievement is testament to the vision and foresight of our wise leadership, who have supported this progressive step that makes Murban crude a freely traded commodity that is more widely available to buyers and traders around the world.”

“The launch of the world’s first Murban Futures contract makes our largest crude grade even more attractive to the global market, enabling Adnoc’s customers and market participants to better price, manage and trade their purchases of Murban. This crude is recognized the world over for its intrinsic chemical qualities, consistent and stable production volumes, large number of international buyers, and numerous long-term concession and production partners,” said Al Jaber.

Jeffrey C. Sprecher, chairman and CEO of Intercontinental Exchange, said the launch of IFAD represents a singular achievement.

“We are bringing a new benchmark to life, and just as Murban has powered the UAE for the past 50 years, with this new futures contract there is a tremendous future ahead for Murban as a price marker for global energy markets.”

“This is the first derivatives exchange in Abu Dhabi and set up at ADGM. We are proud to be the preferred jurisdiction of IFAD and home to the world’s foremost Murban Crude Oil Futures contract,” said Ahmed Ali Al Sayegh, Minister of State and Chairman of Abu Dhabi Global Market.

Adnoc moved to forward pricing of its crude oil in March 2020 and previously priced Murban using Platts Dubai to determine its official selling price (OSP). The company will move its forward pricing mechanism for Murban to the ICE Murban Futures Contract from June, coinciding with the first expiry of Murban Futures.

Discovered in 1958, Murban has played a pivotal role as the bedrock of the UAE’s sustained economic development.

— issacjohn@khaleejtimes.com

author

Issac John

Editorial Director of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE's mainstream journalism for 35 years, including 23 years with Khaleej Times. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.





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