The United Arab Emirates is refashioning state-owned Abu Dhabi National Oil Company (ADNOC) in the image of an international oil major by stepping up its global expansion and finding new revenue streams to maximise earnings for the Gulf state.
Like Gulf neighbours Saudi Arabia and Qatar, the UAE wants to exploit its fossil fuel resources while there is still strong demand for oil and gas and to spend the revenue on diversifying its economy to lessen its dependence on hydrocarbons.
As part of this strategy, ADNOC told Reuters it was actively pursuing select opportunities in the areas of renewable energy, gas, petrochemicals and liquefied natural gas (LNG), without giving details of any specific targets.
Two people with knowledge of the matter said the company was on the hunt for LNG assets in Africa and was considering buying Galp's 10% stake in a multi-billion-dollar natural gas project in the Rovuma basin off the coast of Mozambique.
ADNOC declined to comment and Galp did not respond to questions from Reuters.
ADNOC has already been busy on the deal front this year. It bought a stake in an Azerbaijani gas field, has put in an offer with BP (BP.L) for a stake in Israeli gas producer NewMed Energy (NWMDp.TA), has opened takeover talks with German plastics maker Covestro (1COV.DE) and is looking to create a $20 billion chemicals giant with Austria's OMV (OMVV.VI).
The state-owned company also told Reuters it was investing in energy trading, without giving further details. Reuters reported last year that ADNOC was set to open 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 are actively pursuing select opportunities, while also investing in and growing our trading capabilities," an ADNOC spokesperson said in response to written questions.
ADNOC has two trading arms, both set up in 2020: ADNOC Trading, which is focused on crude oil, and ADNOC Global Trading, a joint venture with Italy's Eni (ENI.MI) and OMV which is more focused on refined products.
OIL MAJOR
While ADNOC's deal-making dates back to 2017 when it listed its fuel distribution unit, the pace of change accelerated after a board meeting in November chaired by UAE President Mohammed bin Zayed.
The board brought forward to 2027 plans to up production capacity to 5 million barrels per day and also approved a five-year business plan and capital spending of $150 billion.
"The thinking is to move away from a traditional state oil firm model to more like an IOC (international oil company)," a source with knowledge of the matter said.
The transformation at ADNOC is similar to ongoing changes at state-owned energy giants in Saudi Arabia and Qatar.
The national energy champions - ADNOC, Saudia Arabia's Aramco (2222.SE) and QatarEnergy - drive their economies but were traditionally focused on oil and gas production at home.
Now, as the transition to renewable energy accelerates, the timeline is shortening for these so-called national oil companies (NOCs) to monetise their reserves and they are also doubling-down on opportunities further afield.
To propel its changes, ADNOC has hired more than 3,370 staff, including 28 senior managers, so far this year from companies such as global energy firms, trading houses, banks and consultancies, according to data on employment network LinkedIn.
LinkedIn data shows ADNOC's headcount is up 13% this year, and by a quarter over the past two years, to about 32,750. The actual number, however, which ADNOC has never disclosed, is now over 40,000, one person familiar with the matter said.
"As we continue to grow our business, we are creating exciting opportunities for our talented workforce as we accelerate the transformation, decarbonisation of and future-proof our company," the ADNOC spokesperson said in response to questions about hiring.
SENIOR HIRES
Michele Fiorentino, who was chief investment officer from 2017-2020, confirmed to Reuters that he recently returned to ADNOC from U.S. oil services firm Baker Hughes (BKR.O) as executive vice president for low carbon solutions and business development.
He reports to Musabbeh Al Kaabi, ADNOC's low carbon solutions and international growth chief, also a new hire who came on board in January. Emirati Al Kaabi also chairs Mubadala Energy and is on the boards of several state-linked firms.
Other recent hires include Bart Cornelissen, who left Deloitte to become ADNOC's senior vice president for group strategy and portfolio last month, according to LinkedIn.
Michael Hafner, a long-time investment banker in the energy sector - most recently at Greenhill & Co (GHL.N) and previously at Deutsche Bank (DBKGn.DE) and UBS (UBSG.S) - also joined ADNOC last month as a senior adviser to the executive office for business development.
Cornelissen and Hafner did not respond to requests for comment.
Other senior managers have recently been hired from Western firms including Morgan Stanley (MS.N), HSBC (HSBA.L), Natixis (BFCEp.PA), Litasco, Borealis, TotalEnergies (TTEF.PA), Shell (SHEL.L) and Eni, according to LinkedIn.
Recent senior hires for ADNOC's trading arms include alumni of Gunvor, Litasco, Shell and TotalEnergies, the employment network showed.
"ADNOC wants to expand in Europe, whether it was through Gunvor or organically," a source with knowledge of the matter said. "Now that the Gunvor deal is off the table, it will focus on organic growth."
CLIMATE SUMMIT
Despite the speed of changes, analysts say ADNOC, like its rivals in Saudi Arabia and Qatar, will always be limited to some degree by government control.
"NOCs - even if wannabe IOCs - are ultimately tethered to their governments and must serve goals of the country's leadership," said Neil Quilliam, associate fellow at the Chatham House think tank said.
"There is nothing wrong with that and plenty of national champions serve that purpose, but the price to pay will always be ADNOC's freedom for manoeuvre," he said.
The mission to maximise oil revenues to fund the economy's transition is also hard to square with the global push to accelerate the shift toward lower-carbon fuels and to reduce the production and consumption of fossil fuels quickly.
The United Nations, for example, has come under fire for giving the presidency of this year's COP28 climate summit to the UAE. Sultan al-Jaber, ADNOC's CEO since 2016, will preside over the meeting, which climate activists say will limit the ambition of efforts to mitigate climate change.
Jaber's supporters, which include for example U.S. climate envoy John Kerry, have said his ADNOC role would help bridge the gap in the conversation and accelerate change.
ADNOC has said it will spend an initial $15 billion on climate-friendly projects by 2027. Jaber also chairs Abu Dhabi company Masdar, of which ADNOC owns 24%. It aims to install 100 gigawatts of renewable energy by 2030, and to eventually double that.
