Abu Dhabi: Intercontinental Exchange, an operator of global exchanges and clearing houses and provider of data and listings services, on Monday announced that it will launch a new exchange, ICE Futures Abu Dhabi (IFAD). The exchange will host the world’s first futures contracts based on Abu Dhabi National Oil Company’s (Adnoc’s) Murban crude oil.
The new exchange, which was announced on the sidelines of Adipec, will be established at the Abu Dhabi Global Market (ADGM), with the new exchange having been granted recognition by the Financial Services Regulatory Authority as a recognised investment exchange.
Contracts traded at IFAD will, subject to regulatory approval, be cleared at ICE Clear Europe, and will clear alongside ICE Brent, ICE WTI, ICE (Platts) Dubai and ICE Low Sulphur Gasoil allowing customers to benefit from associated margin offsets and delivering meaningful capital efficiencies.
ICE Murban Futures will be a physically delivered contract with delivery at Fujairah.
“The recent decision by the Supreme Petroleum Council (SPC) and the launch of a new exchange in Abu Dhabi by ICE marks a historic change in the way Murban crude will be priced and traded,” said Dr. Sultan Al Jaber, Minister of State and Adnoc Group chief executive officer.
“For the first time, Murban will be priced on a forward looking, market driven basis based off the ICE Murban future, offering the market greater transparency and certainty. The launch of ICE Futures Abu Dhabi further reinforces Abu Dhabi’s status as a global energy hub, and supports Adnoc’s continued transformation into a more modern and progressive energy company,” he added.
“The Murban futures contract will allow our customers to hedge their risk in the open market and will also allow for us to maximise value on every barrel we produce,” he said.
Al Jaber said that Murban’s high quality would make it a highly sought after commodity on the futures exchange market once launched.
“Murban accounts for 50 per cent of the UAE’s total crude oil production and it is globally recognised and acknowledged as a very special type of crude for its quality and its reliability of supply.”
For his part, Jeffrey C. Sprecher, chairman and chief executive officer at Intercontinental Exchange, said the new price listings of Murban would allow Adnoc to reach a larger base of customers to sell its oil.
“With the launch next year of ICE Futures Abu Dhabi, Murban futures will sit alongside the most significant global oil benchmarks, providing the opportunity for the first time for a much larger group of participants to trade and hedge Murban in a regulated, transparent and accessible venue.
“ICE was founded with a vision to create an open, transparent electronic marketplace for energy trading,” he said.
The launch of IFAD will also see several of the world’s leading oil companies partnering with the new futures market including BP, Shell, Total, CNPC and Inpex.
“As oil demand from Asia continues to develop, we believe Murban will be an important new oil price benchmark for supply from the Gulf Region,” said Bob Dudley, BP group chief executive, commenting on the company’s partnership.
In a decision announced last week by the SPC, Adnoc will for the first time starting listing Murban crude on a futures exchange market, with the new pricing mechanism set to be implemented between quarters two and three of 2020.