Oil markets will rebalance over time, says Adnoc CEO

Dr Sultan Ahmed Al Jaber, UAE Minister of State and Group CEO of the Abu Dhabi National Oil Company (Adnoc), said there are signs that oil markets have tightened in recent weeks and will rebalance over time.

Speaking on Adnoc’s “Virtual Majlis” with Helima Croft, Managing Director and Global Head of Commodity Strategy at RBC Capital Markets, Dr Al Jaber said the world is in unchartered territory and right now, no one is in a position to predict exactly what the global economic recovery will look like. While this outlook remains unpredictable, Dr Al Jaber highlighted reasons for cautious optimism in oil markets.

“When it comes to oil, there are signs that the market has tightened in recent weeks. The Opec-plus agreement, voluntary cuts outside Opec-plus plus, and production shut-ins are working together to start to rebalance the market. This will take time. As economies begin to open up, demand will follow, but the path to the next normal is not a straight line,” Dr Al Jaber said.

Dr Al Jaber continued by highlighting how Adnoc is reaping the benefits of its transformation over the past four years as it navigates this period of uncertainty.

“We are seeing the benefits of the steps we have taken on over the last four years. In fact, this crisis has highlighted just how forward-thinking our leadership’s guidance has been in directing this transformation. As a result, Adnoc is now far stronger and better positioned to manage the current market dynamics.

“Through our transformation, we have focused on what we can control and that is our costs. We’ve been laser-focused on being one of the lowest-cost producers in the world. And this has given us the flexibility and the resilience that we need at times like these. In this environment, we are continuing to work even harder to preserve our resources, and maximize our profitability,” Al Jaber said.

Al Jaber stressed Adnoc continues to make the health and safety of its employees its top priority as it proactively responds to the risks presented by the COVID-19 situation. He detailed how this approach closely aligns with the wise measures put in place by the UAE leadership to ensure the health and safety of everyone living in the country while driving health diplomacy around the world.

“The foundation of the UAE’s response has been comprehensive testing. We have so far conducted well over 1.5 million tests, one of the highest, if not the highest per capita ratios in the world. At the same time, the UAE believes that international cooperation is key to managing the crisis. So, we are staying connected to the rest of the world through health diplomacy, delivering aid, and personal protective equipment to 47 countries when they need it most.

“At Adnoc, we have taken additional precautions to enhance the safety of our employees, including comprehensive testing, minimizing staff on site, and ensuring all office-based staff can work effectively from home. On top of that, transparent communication has been critical,” Dr Al Jaber said.

The pandemic has highlighted the importance of three key leadership qualities - Capability, Crisis Management, and Connectivity, according to Al Jaber.

“Fundamentally, the capability of every organisation in keeping their people safe, and their operations running smoothly is being tested. At the same time, leaders are being measured against how well they manage a crisis, ensuring their organizations can run under stress. And then connectivity, how clearly leaders communicate to their people what they need to do to stay safe,” Al Jaber said.

Concluding the majlis, Dr Al Jaber underscored the importance of business leaders conveying a positive, optimistic, and credible way forward, with humility and honesty.

“It is essential to communicate a message of unity, that we are in this together and will find our way through together,” Al Jaber added.

Adnoc’s virtual majlis is part of several initiatives the company embarked on last month as part of its participation in the “UAE Volunteers” initiative. Broadcasted on Adnoc’s social media platforms, the virtual majlis is bringing together UAE government leaders and global experts to engage on the key issues facing the world today and provide actionable insights to topics ranging from how to rebuild the global and domestic economy, to what the post-COVID-19 workplace should look like.

Adnoc Distribution, the UAE’s largest fuel and convenience retailer, recently announced its first quarter 2020 financial results, recording an underlying EBITDA of Dhs629 million, a growth of 4.7 per cent.In a statement, the company noted net profit was Dhs400 million for the quarter and cash flow generation “remained strong” with free cash flow of Dhs533 million.

WAM