ADNOC removes destination restrictions on its crude grades

The Abu Dhabi National Oil Company (ADNOC) announced that it will remove destination restrictions on its Murban, Upper Zakum, Das and Umm Lulu crude grades, starting from the first traded contract month of the new ICE Murban Crude Oil Futures Contract.

The company also confirmed that ADNOC Onshore, the producer of Murban Crude Oil, has launched a new monthly Murban Export Availability Forecast Report to provide forward visibility to market participants of expected Murban volumes available for export.

ICE plans to launch ICE Futures Abu Dhabi (IFAD), Murban Crude Oil futures, and related cash settled derivatives and inter-commodity spreads, on March 29, 2021. Murban futures will go to physical delivery two months ahead, meaning that the delivery month for the contract is two months ahead of the pricing month. In February, ICE confirmed that the first Murban futures contract month at launch will be the June contract, which expires at the end of April for physical delivery in June. Accordingly, destination restrictions on ADNOC crude grades will be removed from June 2021. This means that all barrels purchased from ADNOC can be sold onwards by the purchasing party (there is no restriction on reselling purchased barrels, ensuring that they can be freely traded).

Khaled Salmeen, Executive Director of ADNOC’s Downstream Industry, Marketing and Trading directorate said: “Under the supervision of His Excellency, Dr Sultan Al Jaber, Managing Director and CEO of ADNOC Group, ADNOC is committed to ensuring that the necessary conditions are in place for Murban to succeed as freely tradable crude grade and as a trusted price marker. By lifting destination restrictions, ADNOC crude grades will become more attractive to global customers and the wider trading community. This is another important step as we prepare for the launch of the new Murban Futures Contract on the 29^th March.” 

ADNOC also confirmed that ADNOC Onshore has launched a monthly Murban export availability forecast report with a 12-month rolling forecast of Murban export availability. The first report was released in February and is available on an ADNOC Onshore managed webpage. This provides market participants with visibility of expected Murban Export availability volumes.

By 2030, ADNOC expects its Murban grade crude to contribute almost 50% of the company’s 5 million barrels of oil per day production capacity target. ADNOC Onshore’s largest Murban producing onshore assets – Bu Hasa and the South East group of fields – already have a production capacity of 650,000 and 630,000 barrels respectively. At the giant Bab field, building facilities and infrastructure is underway, to increase production capacity from over 420,000 to 485,000 barrels per day by end 2021.

Speaking during a virtual media visit to ADNOC Onshore facilities, Mr Salmeen and Mr Stuart Williams, President of ICE Futures Europe, highlighted that ADNOC and ICE Futures Abu Dhabi (IFAD) have signed new agreements with Rongsheng Petrochemical Co, Ltd, and Unipec from China, to explore using the upcoming Murban futures contract.  This follows earlier agreements that were signed with companies in the United States and Japan.

Meng Fanqiu, General Manager of Rongsheng Petrochemical Singapore Pte Ltd said: “Rongsheng will participate in IFAD and offtake Abu Dhabi crude priced with reference to ICE Murban Crude Oil Futures for supply to China. We believe that ICE Murban Crude Oil Futures will play an important role in the global crude oil pricing and bring more reliability, stability, transparency and liquidity to the market. This agreement further strengthens the relationship between Rongsheng and ADNOC and will open more opportunities to work together in the future.”

“IFAD will provide us with more alternatives to hedge and optimise our crude pricing portfolio.” Said Leo Yang, the Trading General Manager of Unipec Asia, “This is another innovation, injecting vitality to the trading world and enhancing the price discovery mechanism of light crude grades.”

IFAD is established in Abu Dhabi Global Market (ADGM), an International Financial Centre that practices and applies English common law. ICE is the operator of the exchange and the majority shareholder. ADNOC, BP, GS Caltex, INPEX, ENEOS (formally known as JXTG), PetroChina, PTT, Shell, Total (TOTSA) and Vitol are partnering with ICE to support the launch of IFAD.