Tomorrow, a new era will begin for global oil markets, when the first Murban futures contract is sold on the opening day of trading on ICE Futures Abu Dhabi: a new independent energy commodities exchange that will be hosted at Abu Dhabi Global Market.
The launch of ICE Futures Abu Dhabi and the Murban futures contract represents an historic moment for Adnoc, Abu Dhabi and the UAE. As a centre of gravity for the world's energy needs, our nation has long been a reliable supplier. Now, with the entry of our largest crude grade into the global futures market, we will create more value from the energy we produce.
The new Abu Dhabi-based exchange, IFAD, will essentially liberalise access to Murban by transforming the UAE’s flagship crude into a freely traded global commodity. Preferred by many refineries across Asia, about 60 customers in 30 markets choose Murban for its consistent quality, reliable production volumes, stable supply and capacity to increase to meet flexible demand. As demand for oil continues to grow, Murban will be ideally placed to fulfil it. Abu Dhabi and the UAE will gain more value from a product that is freely traded at a price that the market sets, and price transparency will allow our customers to better hedge and manage their market risks. Importantly, for energy-consuming economies, this will increase access to some of the world's least carbon-intensive barrels, as Murban’s carbon intensity is less than half the industry average, giving it a distinct competitive advantage.
When oil first flowed from a well in 1953 about 100 kilometres west of the city of Abu Dhabi, few predicted the impact it would have on our emerging nation. In fact, the first Murban well proved unproductive, but subsequent wells reached commercial viability by 1958, and on December 14, 1963 the first tanker-load of Murban oil was shipped to foreign shores. This marked the beginning of the Murban era, which would transform the economic and social trajectory of our country. Over the past five decades, the growth and enduring success of the Abu Dhabi National Oil Company has been inextricably linked to the development of the UAE, supporting the country's domestic economy, its geopolitical standing and its soft power influence throughout the world.
The Murban Futures contract represents the next step in that journey, and marks a step change in Adnoc's progress as a proactive player in oil markets. This evolution began with the formation of Adnoc's trading arms, beginning in 2019, which enabled the company to become an active market participant last year. An additional key enabler was the move from retroactive pricing of our Murban crude to forward pricing last March, a critical prerequisite to creating the Murban Futures Contract. Going forward, Murban will be destination-free, allowing buyers to sell it on without restrictions, and allowing Adnoc to capture the incremental value. In short, wherever and whenever crude oil is traded, Murban will be traded, and increasingly, when traders turn on their screens anywhere in the world, Murban will appear alongside its benchmark peers.
Both the futures contract and IFAD are innovations that will introduce new skillsets to the UAE and offer our partners a rewarding investment in the future of our country. Backed by nine of the world’s biggest energy traders, IFAD will establish itself as a key presence in energy markets, with Murban as its core product, extending its reach across energy consuming markets. Analysts already consider Murban as a reference grade for Asia, and over time the name “Murban” will resonate as a benchmark alongside Brent and West Texas Intermediate.
Murban has long been the pride of the UAE. It will soon become a byword for quality and reliability in oil markets everywhere, representing the best of the UAE as an enterprising, positive force in the world, committed to stability, prosperity and sustainable economic progress.
Dr Sultan Al Jaber is Minister of Industry and Advanced Technology, and Adnoc managing director and group chief executive