The state-owned Abu Dhabi National Oil Corporation (ADNOC) has played a crucial role in helping the UAE to gain the top position in the Middle East in Kearney’s 2021 FDI confidence index.
The country has climbed four positions – from 19th in 2020 to 15th in 2021 – globally according to Kearney’s index. This is remarkable considering the COVID-19 pandemic which has slowed down the global economy in 2020.
The ebullient business environment coupled with world-class technological infrastructure in the country has sent the right signals to the investors that the UAE is a haven for investors, particularly in the oil and gas sectors.
UAE’s stability, which allows 100 percent ownership of companies established by foreign investors among other benefits, also positions the country as one of the best for investments.
Leading the inward FDIs, ADNOC has signed deals worth $74.31 billion with global companies to execute major projects in the last four years. ADNOC is also stepping up its crude oil production to 5 million barrels per day from the present 4 million barrels per day by 2030.
Notable among these deals include the $20.7 billion from half a dozen global infrastructure partners such as Brookfield Asset Management, Singapore’s sovereign wealth fund GIC, Ontario Teachers’ Pension Plan Board, South Korea’s NH Investment & Securities and Italy’s Snam in 2020.
Another deal has been with India’s Reliance Industries Limited ($1.5 billion) last month to develop a Chlor-alkali, ethylene dichloride and polyvinyl chloride (PVC) production facility at TA’ZIZ industrial chemical zone in Ruwais near Abu Dhabi. This agreement will provide a thrust to ADNOC’s downstream and industry growth plans in line with ADNOC’s 2030 strategy.
The company said that it would spend $122 billion to develop its upstream, midstream, downstream and its trading and marketing businesses between 2021 and 2025. Out of this, $43.55 billion will be pumped into the national economy.
Plans are underway to sign agreements with local investors to take part in ADNOC’s development activities. Petrochemical, refining and gas growth projects are currently under construction, with several projects also recently completed across the downstream and industry portfolio.
Investments in new projects
Besides developing an oil and gas network, ADNOC has set its eyes to develop green hydrogen and blue ammonia products and export them in the future. The company has joined hands with the UAE’s two sovereign funds – Mubadala and ADQ – to invest in the hydrogen value chain and meet the global demand.
Compared with Saudi Arabia, the UAE is better placed to produce green hydrogen and blue ammonia as the installed capacity of its renewable energy was 2.54 GW. Saudi Arabia’s installed capacity of solar power is only 413 MW till the end of 2020.
Fertiglobe, a joint venture with Dutch chemicals company OCI, has announced its participation in ADNOC’s blue ammonia project that will produce 1 million MTPA of the commodity.
ADNOC also wants to expand its carbon capture utilization and storage project at Reyadah from the present 800,000 MTPA of carbon dioxide to 5 million MTPA by 2030. Carbon dioxide is one of the sources to produce blue ammonia.
The company has already signed an agreement with Japan as the latter pledged to achieve carbon neutrality by 2050, with hydrogen and ammonia accounting for about 10 percent of the power generation mix by that time.
In September 2020, ADNOC entered into a strategic investment with Apollo Global Management, one of the world’s largest alternative investment managers and its subsidiaries, for an underlying real estate portfolio valued at $5.5 billion. This led to a further FDI inflow of $2.7 billion.
ADNOC has also announced that Abu Dhabi Pension Fund (ADPF) and state holding company ADQ will invest $2.1 billion in ADNOC gas pipeline assets. While ADPF and ADQ will take a 20 percent stake in ADNOC Gas Pipelines HoldCo, a subsidiary of ADNOC, with lease rights to 38 gas pipelines covering nearly 982 km.