Abu Dhabi: Abu Dhabi Marine Operating Company (Adma-Opco) and Zakum Development Company (Zadco) will be combined into a new entity, Abu Dhabi National Oil Company (Adnoc) said on Tuesday, as the government undertakes efforts to combine different entities due to low oil price environment.
This is the third such consolidation effort in the last three months after the merger of National Bank of Abu Dhabi (NBAD) with First Gulf Bank (FGB), and that of Mubadala with International Petroleum Investment Company (Ipic) in June.
According to Adnoc, the new consolidation will enable efficiencies and synergies across the multiple Adma-Opco and Zadco offshore concessions and fields, including Zakum, the largest offshore field in the world in terms of reserves.
“The new company resulting from this integration will be more agile, better able to respond to changing market demands, and be well positioned to take advantage of strategic opportunities for future growth,” Adnoc said in a statement.
Sultan Al Jaber, the UAE Minister of State and CEO of the Adnoc Group, said the consolidation will facilitate enhanced operational performance while providing strategic benefits for future growth and advanced technology integration.
“Importantly, it will unite our offshore experience, streamline governance and decision making, and give management a better line of sight through the company’s operations,” he said. “Consolidating the two companies into a single new entity responsible for operating the associated concessions will also help fulfil the Adnoc Group’s strategic imperative of creating a more profitable upstream business — benefiting both Adnoc and its partners.”
The integration process is expected to be completed by early 2018 under a steering committee formed by Adnoc and its partners BP, ExxonMobil, Japan Oil Development Company (JODCO) and Total.
Yaser Al Mazrouei, currently the CEO of Adma-Opco will be the joint CEO of Adma-Opco and Zadco who will oversee the consolidation process along with the committee.
“Looking ahead, Adnoc will continue to review and consider all options, and pursue partners for concessions expiring in 2018,” Al Jaber added.
The existing concession rights of partners currently operated by Adma-Opco and Zadco will not be affected due to the new decision.
Adnoc has a 60 per cent share in Adma-Opco and the rest being shared between BP, Jodco and Total.
In Zadco, Adnoc has 60 per cent stake, while ExxonMobil and Jodco hold the remaining shares.
The current production of the UAE’s offshore fields is about 1.2 million barrels per day and the overall UAE output is 3.1 million barrels of oil per day.
The new development comes as gulf economies reel under the pressure of low oil prices, which have plunged by more than 60 per cent in the last two years due to overproduction and weak demand.
Oil producing countries are downsizing companies and are integrating them into one single entity to cope with the low oil price environment. Brent, the global benchmark has been trading at around $50 per barrel in recent times.
