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ICE unveils Futures Abu Dhabi

Ashwani Kumar /Abu Dhabi
Filed on November 11, 2019 | Last updated on November 11, 2019 at 11.19 pm

(Photo by Ryan Lim)

The new exchange, expected to launch in first half of 2020.

Abu Dhabi National Oil Company (Adnoc) and world's nine major oil companies will partner with the Intercontinental Exchange (ICE) to set up a new exchange known as ICE Futures Abu Dhabi (IFAD). The new exchange, expected to launch in first half of 2020, will host the world's first futures contract based on Adnoc's Murban crude oil.

The landmark announcement was made during the opening day of the Abu Dhabi International Petroleum Exhibition and Conference (Adipec) on Monday. Dr Sultan Al Jaber, Minister of State and Adnoc Group CEO, termed it as a very 'important day for the industry'.

"Intercontinental Exchange is one of the world's most recognised and leading operators of global exchanges and clearing houses and Adnoc is pleased to be a part of this significant new venture which will strengthen Abu Dhabi's position as a global energy hub. We are particularly pleased that nine leading global energy companies, all of which are our partners and customers, have decided to join us in this initiative. Having a new independent exchange in Abu Dhabi will not only benefit the UAE, but also physical and financial oil traders around the world," Al Jaber said.

Adnoc will join nine other companies - BP, GS Caltex, Inpex, JXTG, PetroChina, PTT, Shell, Total and Vitol - as the founding partners of the new exchange.

Al Jaber noted the Murban futures contract will replace retroactive pricing, allowing buyers to hedge risks and capture more value from Adnoc's oil output.

"Leveraging the UAE's position at the pivot point of growth economies, IFAD will be home to the Murban Futures Contract. Crucially, this contract will replace retroactive pricing with forward pricing. It will allow buyers to hedge their risk in the open market. And it will help capture more value from every barrel we produce. This represents a historic milestone that offers our partners and customers significant benefits, and it places Abu Dhabi and the UAE at the geographic centre of global crude trading."

He added that Murban accounts for 50 per cent of the UAE's total crude oil production and is globally recognised and acknowledged as a special type of crude for its quality and reliability of supply.

"Given the significant flows of Murban into Asia we believe the oil market is very ready for a new more geographically relevant market. A new independent exchange in Abu Dhabi will help advance Abu Dhabi's efforts in addressing global challenges by creating new opportunities."

Meanwhile, Jeffrey C. Sprecher, chairman and chief executive officer, Intercontinental Exchange, said IFAD will be a regional centre for price discovery of crude oil.

"The group has major energy companies from around the world. We all have agreed to become partners in this new exchange - ICE Futures Abu Dhabi. We are quite excited. This is major initiative in which we all are committed to and one that we think is going to take Abu Dhabi and Murban to next level of transparency and globalisation. This is a significant endorsement and strong signal of the potential for Murban to become a new global crude benchmark."

Abu Dhabi Global Market will host the world's first Murban crude oil futures contracts.

"This development marks momentous progress within the energy industry and adds new vibrancy to the capital markets of the UAE and wider Middle East region. We welcome IFAD as an important international exchange to the ADGM family, which adds to our diverse global community," said Ahmed Ali Al Sayegh, Minister of State (UAE) and the Executive Chairman of Abu Dhabi Global Market.

Meanwhile, Bob Dudley, BP's chief executive officer, said a piece of history was created in Abu Dhabi.

"Murban has the characteristics to be a great new global crude oil benchmark. I think today we are watching in the oil and gas industry a piece of history," Dudley said.

There were top officials from all partner companies, who later inked the agreement for IFAD during the press conference.

- ashwani@khaleejtimes.com

Ashwani Kumar


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