Abu Dhabi-owned Mubadala Investment Company's integrated petroleum and petrochemicals unit is seeking lower-cost barrels of oil at home and across Asia, even as it positions itself as a strong player in the North American natural gas and chemicals industry, its CEO said.
Musabbeh Al Kaabi, who heads Mubadala’s Petroleum and Petrochemicals division after its integration with International Petroleum Investment Company (Ipic) last year, said the new entity’s bet on petrochemicals, in which they invested just over $3 billion in 2017 alone, had put them “on the right trajectory” post-merger.
"With these big transactions lately, it is fulfilling our strategic vision, but overall in the US, it's [a] very interesting dynamic, because [of] access to a highly competitive feedstock thanks to the shale revolution, and that's why [I] see an almost strategic shift to North America when it comes to the petrochemicals industries," Mr Al Kaabi said in an interview with The National in Abu Dhabi.
Mubadala's Petroleum and Petrochemicals platform, which is part of the estimated $127bn state fund, values its portfolio at $40bn today, with just over $8bn spent in the last year alone in a raft of upstream and downstream investments.
Gas, which accounted for 56 per cent of the entity’s portfolio in 2016, still dominates business with a pivot to acquiring lower-cost barrels of oil, through their acquisition of Spanish oil and gas company Cepsa.
“A strategic decision [has been taken] to invest in low-cost oil, which means that regardless what oil prices will look like in the future, hopefully our portfolio will remain resilient and profitable under any scenario going forward,” he said.
“Gas on the other hand is enjoying a very solid growth, almost 1.7 per cent CAGR [compound annual growth rate] and it’s a transitional fuel for less carbonised economies in the future,” he added.The company’s subsidiary Mubadala Petroleum recently took a 10 per cent stake in the Shorouk concession, part of Italy’s Eni-operated Zohr gas field, one of the largest gas discoveries in the Eastern Mediterranean.
The firm also recently took final investment decision on a gas field offshore Malaysia, for which Mubadala along with state oil company Petronas and Shell’s local affiliate will pledge equity stakes, with the possibility of other financing options in the future, said Mr Al Kaabi.
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Mubadala is now seeking more stakeholders for Cepsa, which it acquired through Ipic in 2011.
“We are exploring options to list the company in Spain, to bring a strategic partner, but it is still at a very early stage. We do that because the company is very solid now in their portfolio, their financial and operational performance is excellent,” said Mr Al Kaabi.
Madrid-headquartered Cepsa balances Mubadala’s gas-leaning portfolio, with its exposure to oil assets in South America, South East Asia and Kenya, as well as a significant portfolio of chemical assets, notably linear alkyl benzene (LAB) - which finds uses in the detergent industry.
The Spanish firm in February won a 20 per cent stake worth $1.5bn in the twin concessions of Umm Lulu and SARB, which lie offshore the territorial waters of Abu Dhabi.
The company is also currently undertaking feasibility for a 150,000-tonne LAB facility to be integrated with Abu Dhabi National Oil Company’s Ruwais refinery. Feasibility on the facility is "almost completed,” said Mr Al Kaabi.
Cepsa’s recent successes offshore and onshore the UAE had made it “very attractive for many investors,” he said, adding that the company would likely “list hopefully in Spain” and was targeting 2018 as the appropriate timeline.
Mubadala was seeking partners “that shared similar values,” he added.
The company was also looking to shape Cepsa into an integrated energy company, with renewable components such as wind and solar also likely added to the mix.
“When it comes to integrated energy companies, being in Europe, and being an international company, it is very important that it is part of all energy sources and definitely renewable energy,” said Mr Al Kaabi.
Mubadala, which owns 25 per cent of Austrian oil and gas company OMV would “welcome any further collaboration between OMV and Adnoc,” said Mr Al Kaabi. The Austrian firm was said to be in talks for a stake in Adnoc’s split Adma-Opco concessions as it looked to diversify its exposure to Russian gas investments.
“OMV historically has been part of a consortium to evaluate Shuwaihat sour gas field and took an exploration block east of Abu Dhabi so they’re usually active with Adnoc, upstream and downstream,” he added.
Elsewhere, Mubadala is set to conclude investment decision on a new refinery with “north of 200,000 barrel per day capacity” with Karachi-based Pak Arab Refinery Company (in the south of Pakistan,“by the end of the year or early next year.”
The upcoming refinery could likely use Abu Dhabi crude, he added.
Mubadala, which has been optimistic about the US energy investment landscape, is also considering opportunities in the liquefied natural gas (LNG) sector, which has seen the emergence of smaller module-sized operators, who have begun to seek out equity partnerships from off-takers.
The company, which was said to have had discussions with the planned 27.6 million tonne-capacity Tellurian LNG facility in the US state of Louisiana, had made “a small investment in shale or unconventional gas” and “was monitoring that space”, Mr Al Kaabi said without elaborating.
Two factors - an acceptable Henry Hub price, the benchmark used to price natural gas, as well as an acceptable liquefaction cost - would need to be arrived at to make the US a more competitive player in the global gas markets, he added.
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Predicted winners for final round of games before play-offs:
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Final top-four (who will make play-offs): Chennai, Hyderabad, Mumbai and Bangalore
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Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
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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.”
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What is the FNC?
The Federal National Council is one of five federal authorities established by the UAE constitution. It held its first session on December 2, 1972, a year to the day after Federation.
It has 40 members, eight of whom are women. The members represent the UAE population through each of the emirates. Abu Dhabi and Dubai have eight members each, Sharjah and Ras al Khaimah six, and Ajman, Fujairah and Umm Al Quwain have four.
They bring Emirati issues to the council for debate and put those concerns to ministers summoned for questioning.
The FNC’s main functions include passing, amending or rejecting federal draft laws, discussing international treaties and agreements, and offering recommendations on general subjects raised during sessions.
Federal draft laws must first pass through the FNC for recommendations when members can amend the laws to suit the needs of citizens. The draft laws are then forwarded to the Cabinet for consideration and approval.
Since 2006, half of the members have been elected by UAE citizens to serve four-year terms and the other half are appointed by the Ruler’s Courts of the seven emirates.
In the 2015 elections, 78 of the 252 candidates were women. Women also represented 48 per cent of all voters and 67 per cent of the voters were under the age of 40.
Takreem Awards winners 2021
Corporate Leadership: Carl Bistany (Lebanon)
Cultural Excellence: Hoor Al Qasimi (UAE)
Environmental Development and Sustainability: Bkerzay (Lebanon)
Environmental Development and Sustainability: Raya Ani (Iraq)
Humanitarian and Civic Services: Women’s Programs Association (Lebanon)
Humanitarian and Civic Services: Osamah Al Thini (Libya)
Excellence in Education: World Innovation Summit for Education (WISE) (Qatar)
Outstanding Arab Woman: Balghis Badri (Sudan)
Scientific and Technological Achievement: Mohamed Slim Alouini (KSA)
Young Entrepreneur: Omar Itani (Lebanon)
Lifetime Achievement: Suad Al Amiry (Palestine)
How to report a beggar
Abu Dhabi – Call 999 or 8002626 (Aman Service)
Dubai – Call 800243
Sharjah – Call 065632222
Ras Al Khaimah - Call 072053372
Ajman – Call 067401616
Umm Al Quwain – Call 999
Fujairah - Call 092051100 or 092224411
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Brief scores:
Pakistan (1st innings) 181: Babar 71; Olivier 6-37
South Africa (1st innings) 223: Bavuma 53; Amir 4-62
Pakistan (2nd innings) 190: Masood 65, Imam 57; Olivier 5-59