Adnoc's Murban crude to be listed on futures exchange in 'historic' step-change for Abu Dhabi's oil pricing

The emirate's Supreme Petroleum Council also said that additional oil and gas discoveries now position the UAE sixth-highest globally

Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces (second right) tours the new expansion and development work at the Abu Dhabi National Oil Company (ADNOC) Headquarters. He is seen with Dr Sultan Al Jaber, UAE Minister of State, Chairman of Masdar and CEO of ADNOC Group (right). Hamad Al Kaabi / Ministry of Presidential Affairs

Sheikh Mohamed bin Zayed (left) tours the new expansion and development work at the Abu Dhabi National Oil Company (ADNOC) Headquarters. He is seen with Dr Sultan Al Jaber, UAE Minister of State, Chairman of Masdar and CEO of ADNOC Group (right). Hamad Al Kaabi / Ministry of Presidential Affairs

Sheikh Mohamed bin Zayed tours the new expansion and development work at the Abu Dhabi National Oil Company (ADNOC) Headquarters. He is seen with Mohamed Mubarak Al Mazrouei, Undersecretary of the Crown Prince Court of Abu Dhabi (back right), Dr Sultan Al Jaber, UAE Minister of State, Chairman of Masdar and CEO of ADNOC Group (third right) and Sheikh Hamed bin Zayed, Abu Dhabi Executive Council Member (back centre). Hamad Al Kaabi / Ministry of Presidential Affairs

Sheikh Mohamed bin Zayed (second right) tours the new expansion and development work at the Abu Dhabi National Oil Company (ADNOC) Headquarters. He is seen with Dr Sultan Al Jaber, UAE Minister of State, Chairman of Masdar and CEO of ADNOC Group (left). Hamad Al Kaabi / Ministry of Presidential Affairs

Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces (seventh left) chairs a Supreme Petroleum Council meeting at the Abu Dhabi National Oil Company (ADNOC) Headquarters. Seen with Awaidha Murshed Al Murar, Chairman of the Department of Energy and Abu Dhabi Executive Council Member (left), Jassem Mohamed Bu Ataba Al Zaabi, Chairman of Abu Dhabi Executive Office and Abu Dhabi Executive Council Member (second right) Dr Ahmed Mubarak Al Mazrouei, chairman of the Office of the Chairman of the Abu Dhabi Executive Council (third right) Dr Sultan Al Jaber, UAE Minister of State, Chairman of Masdar and CEO of ADNOC Group (fourth right) Sheikh Theyab bin Mohamed bin Zayed, Abu Dhabi Executive Council member and Chairman of the Abu Dhabi Crown Prince Court (CPC) (fifth right) and Sheikh Mansour bin Zayed, UAE Deputy Prime Minister and Minister of Presidential Affairs (sixth right). Mohamed Al Hammadi / Ministry of Presidential Affairs

Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces (centre) chairs a Supreme Petroleum Council meeting at the Abu Dhabi National Oil Company (ADNOC) Headquarters. Hamad Al Kaabi / Ministry of Presidential Affairs

Suhail Faris Ghanem Al Mazrouei, Abdulla Nasser Al Suwaidi, Chairman of the Board of Management (FANR), Khaldoon Khalifa Al Mubarak, CEO and Managing Director Mubadala, Chairman of the Abu Dhabi Executive Affairs Authority and Abu Dhabi Executive Council Member, Suhail bin Mohamed Faraj Faris Al Mazrouei, UAE Minister of Energy, Hamad Mubarak Al Shamsi, Secretary General of the Supreme Petroleum Council and Sheikh Hamed bin Zayed, Abu Dhabi Executive Council Member, attend a Supreme Petroleum Council meeting at the Abu Dhabi National Oil Company (ADNOC) Headquarters. Mohamed Al Hammadi / Ministry of Presidential Affairs

Abu Dhabi's Supreme Petroleum Council on Monday approved a decision to list Adnoc's flagship Murban crude on a futures exchange as the energy governing body also updated the country's oil and gas reserves following new discoveries in the emirate.

During a meeting, Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, and vice-chairman of the SPC, said the new pricing mechanism for the onshore crude grade was a "strategic and historic decision" which will provide markets with "greater confidence and solidify Abu Dhabi’s position as a global energy hub and an essential energy provider to the world, particularly the fast-growing markets in Asia", according to a statement from Adnoc.

The company's group chief executive, Dr Sultan Al Jaber, said "to list Murban on an internationally recognised exchange and improve the terms of sale of Adnoc's Murban Crude, is another significant step in our transformation.

"The initiative will enable our customers and other market participants to better price, manage and trade their purchases of Murban."

In a "historic milestone for the country since the last major update of its reserves base three decades ago", the SPC also announced additional hydrocarbon reserves of 7 billion "stock tank" barrels of oil and 58 trillion cubic feet of conventional gas and 160tcf of unconventional gas, Adnoc said. These finds have pushed the UAE to the sixth position globally in terms of hydrocarbon reserves, from seventh, according to data listed by the US Energy Information Administration.

The UAE accounts for 4 per cent of global production, with much of the output from fields managed and owned by Adnoc. At the end of 2018, the UAE accounted for 5.7 per cent of global oil reserves, with an estimated 97.8 billion barrels and 209.7tcf of gas reserves, accounting for 3 per cent of global share, according to the BP Statistical Review of World Energy. That oil reserves number has been unchanged since 1998. On Monday, the SPC said the UAE has reserves of 105 billion barrels of oil and 273tcf of conventional gas. That puts the UAE's oil reserves higher than Kuwait's 101.5 billion barrels, and below fellow Middle Eastern producers Saudi Arabia's 297.7bn, Iran's 155.6bn and Iraq's 147.2bn, as listed by BP.  Globally, BP lists Canada, Russia and Venezuela also as having higher oil reserves than the UAE.

Murban is Abu Dhabi's flagship crude grade, which flows at approximately 1.7 million barrels per day. The company currently uses a retroactive pricing mechanism for its crude.

The new Murban Crude forward pricing mechanism will use a market-driven futures contract as its price marker, enabling customers and the market to better price, trade, and manage their crude requirements, Adnoc said.

The contract will be traded on an - yet to be named  - "independent and regulated" exchange and is "expected to demonstrate a highly liquid forward price curve, given the market appetite for Middle East crude", Adnoc said.

The forward pricing mechanism on Murban crude will be implemented between the second and third quarters of 2020.

The SPC also lifted restrictions on destinations for sale of Murban crude.

“Murban is recognised the world over for its intrinsic chemical qualities, consistent and stable production volumes, large number of international buyers, and numerous long-term concession and production partners," said Dr Al Jaber.

"These landmark changes, the SPC has approved, will make Murban an even more attractive crude to the global market," he added.

Adnoc said its conventional oil and gas reserves were independently assessed by consulting company Ryder Scott, while its unconventional gas resources were assessed by US company Rose and Associates.