The disruption of shipping through the Strait of Hormuz has drained nearly one billion barrels from global oil inventories, exposing the need for a fundamental rethink of energy security, the Adipec conference in Abu Dhabi heard on Monday.
“Simply put, the world has eroded its supply buffers,” said Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology and managing director and group chief executive of Adnoc.
“But, trust me, supply is only half the story. The other half is delivery."
During the event's opening ceremony, Dr Al Jaber called for greater investment in supply infrastructure and artificial intelligence to help the energy industry withstand future shocks, warning that securing production was no longer enough to guarantee that supplies reach consumers.
Referring to OpenAI chief executive Sam Altman, who attended the ceremony, Dr Al Jaber said, “Sam, from the moment ChatGPT was born, the world has asked what energy can do for AI. And now, together, we will find out what AI can do for energy.”
He spoke as Adnoc announced an agreement with OpenAI and G42 to become the world's first energy company to deploy OpenAI's Frontier platform, with plans to transform the Abu Dhabi energy company's field development, well management and commercial operations.
The partnership, guided by Sheikh Khaled bin Mohamed, Crown Prince of Abu Dhabi, would make Adnoc's systems smarter, safer, more secure, more resilient and more productive, Dr Al Jaber said.
The Iran war severely disrupted energy flows through the Strait of Hormuz and exposed weaknesses in global supply chains, he added.
“For years, our industry optimised for just in time,” Dr Al Jaber said. “And to tell you the truth, we got very good at it. This year we got the bill for just in case.”
Diesel stocks in some markets have fallen to their lowest seasonal levels in 35 years, while others face a 600 billion cubic feet gap in LNG supplies, he said.
Shipping and logistics costs, which accounted for less than 5 per cent of the cost of a barrel before the disruption, now exceed 30 per cent.
“Energy security is not only measured at the point of production. It is now also measured at the point of delivery,” Dr Al Jaber said.
He outlined five priorities for strengthening energy security: accessible supply, routes to market, operational intelligence, investment confidence and people.
He also called for intelligent energy systems capable of anticipating risks, improving performance and reducing costs.
On investment, Dr Al Jaber said: “Capital follows confidence. Policy must create it … finance must accelerate it … and insurance must keep trade moving.”
He said the UAE would continue to advocate dialogue, diplomacy and political solutions to support stability in energy markets and the global economy.
“Talent stayed. Capital stayed. Investment kept coming … and the economy kept moving,” he said.
“That is the UAE model, pressure-tested and proven by results.”
Dr Al Jaber said Adnoc's preparedness had been developed years before the disruption.
“We did not write our resilience playbook during this disruption. We wrote it years before,” he said. “Energy leadership is not measured by what you produce in good times. It is measured by what you deliver in hard times.”
“Because when it counts the most. You can count on the UAE,” he added.
