The Abu Dhabi National Oil Company will host a virtual roundtable discussion this month that will gather chief executives of global energy companies to discuss the challenges facing the industry in the wake of the coronavirus pandemic.
The Abu Dhabi CEO Roundtable, which will be held on June 16, will allow top executives to discuss some of the most critical issues affecting the energy industry and share best practices that were adopted when responding to the Covid-19 crisis.
“The Abu Dhabi CEO Virtual Roundtable is a great opportunity to share best practices and exchange views, as we continue to meet the health and economic challenges of Covid-19,” Dr Sultan Al Jaber, Minister of State and Adnoc Group chief executive said.
“While we continue to place the highest priority on the safety of our people and business continuity, we are seeing encouraging signs of a rebalancing oil market and the beginnings of economic recovery.”
In addition to Dr Al Jaber, the roundtable will be attended by chief executives of major oil companies including Patrick Pouyanné of Total, Bernard Looney from BP, Claudio Descalzi of Eni and Mukesh Ambani, chairman and managing director of Reliance Industries Limited.
Takayuki Ueda, president and chief executive of Japan’s Inpex, Dai Houliang, chairman of CNPC, Vicki Hollub, president and chief executive of Occidental Petroleum, Vagit Alekperov, president and chief executive of Russia’s Lukoil, among others will also take part.
“The Covid-19 pandemic has virtually brought the world to a standstill and altered entire mankind’s way of functioning in a profound manner,” Mr Ambani, said. “This has impacted every country, every industry, every society, every human in ways never imagined before. The energy industry, which is the lifeblood of the world economy, has done well to navigate the immediate challenges.”
Occidental's Vicki Hollub said she is looking forward to coming away from the discussion with "actionable next steps".
"Occidental is committed to working with Adnoc to continue the safe and efficient production of hydrocarbons to meet the world’s energy needs,” she said.
The discussion will be moderated by energy economist and Pulitzer-Prize winning author Daniel Yergin, who is also the vice-chairman of IHS Markit. He said the meeting would be a valuable chance to identify the challenges and opportunities as the world comes out of the crisis.
"The Covid-19 crisis has put the global oil and industry through a shock of huge dimensions, for which there is no precedent. Through all the turmoil, the industry has, with great creativity and flexibility, continued to deliver on its commitments to people all around the world," he said.
Oil prices have seen wide swings this year, mainly due to the coronavirus pandemic that reduced energy demand while supply of crude remained steady.
A key benchmark, the West Texas Intermediate – a blend of US crude grades – took a dive below zero on April 20, trading at -$40 per barrel at one point as severe mobility restrictions were put in place globally to counter the outbreak of the coronavirus. However, WTI rose above $40 per barrel earlier this week after Opec+, which is an alliance of Opec members and non-members led by Saudi Arabia and Russia, extended a pact to continue cutting production by 9.7 million barrels per day for another month.
“The oil, gas, and petrochemical industries will play an essential role in enabling economies as they begin to reopen by providing reliable, affordable, and sustainable supplies of energy. It is important to find creative ways to partner smartly and balance efficiency with responsible investments to ensure our industry’s resilience as a key enabler of economic growth," Dr Al Jaber said.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Heather, the Totality
Matthew Weiner,
Canongate
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
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