ADNOC, Abu Dhabi's oil champion, is betting on worldwide expansion

The UAE is reshaping the state-owned Abu Dhabi National Oil Company (ADNOC) into a worldwide oil major by expanding globally and discovering new revenue streams to maximize earnings for the Gulf state.

The UAE, like its Gulf neighbors Saudi Arabia and Qatar, wants to use its fossil fuel resources while there is still high demand for oil and gas, and then use the proceeds to diversify its economy and reduce its reliance on hydrocarbons.

ADNOC told Reuters that as part of this approach, it was actively exploring certain prospects in renewable energy, gas, petrochemicals, and liquefied natural gas (LNG), without providing precise targets.

According to two people familiar with the situation, the corporation is looking for LNG assets in Africa and is considering purchasing Galp's 10% investment in a multibillion-dollar natural gas project in the Rovuma basin off the coast of Mozambique.

ADNOC declined to comment, while Galp did not react to Reuters' inquiry.

This year has already been a busy one for ADNOC in terms of transactions. It has purchased a share in an Azerbaijani gas field, made an offer to BP (NYSE:BP) for a stake in Israeli gas company NewMed Energy, begun acquisition negotiations with German plastics firm Covestro, and is attempting to form a $20 billion chemicals conglomerate with Austria's OMV.

The state-owned firm also told Reuters that it was investing in energy trading but did not elaborate. Last year, Reuters reported that ADNOC planned to create a trading office in Geneva and a representative office in London.

"As part of our international growth strategy, we are focused on expanding our presence in renewables, gas, LNG, and chemicals, and we are actively pursuing select opportunities, while also investing in and growing our trading capabilities," an ADNOC spokeswoman responded to written inquiries.

ADNOC has two trading arms, both of which were established in 2020: ADNOC Trading, which focuses on crude oil, and ADNOC Global Trading, which is a joint venture with Italy's Eni and OMV and focuses on refined products.

While ADNOC's deal-making stretches back to 2017, when it listed its fuel distribution unit, the pace of change quickened following a board meeting hosted by UAE President Mohammed bin Zayed in November.

The board authorized plans to increase production capacity to 5 million barrels per day by 2027, as well as a five-year business strategy and $150 billion in capital spending.

"The thinking is to move away from a traditional state oil firm model and more like an IOC (international oil company)," a source familiar with the situation said.

ADNOC's reform is similar to ongoing changes at Saudi Arabia's and Qatar's state-owned energy companies.

The national energy champions - ADNOC, Saudi Aramco (TADAWUL:2222), and QatarEnergy - power their economies but have generally been concentrated on domestic oil and gas production.

As the switch to renewable energy continues, the timescale for these so-called national oil companies (NOCs) to monetize their assets is shrinking, and they are doubling down on opportunities further afield.

According to data from the employment network LinkedIn, ADNOC has hired more than 3,370 people this year, including 28 senior managers, from companies such as global energy firms, trading houses, banks, and consultancies.

According to LinkedIn, ADNOC's workforce is increased 13% this year and by a quarter over the last two years, reaching around 32,750. According to one person acquainted with the situation, the exact number, which ADNOC has never acknowledged, is currently over 40,000.

"As we continue to grow our business, we are creating exciting opportunities for our talented workforce as we accelerate the transformation, decarbonisation, and future-proofing of our company," stated an ADNOC spokeswoman in answer to hiring questions.