Middle East NOCs Identify Diversification as Priority for Stable
Long-Term Business Growth
Investment Strategies Aim to Maximise Revenue from Each Barrel of Oil
ADIPEC Will Support Vertical Integration Through Upstream, Midstream and Downstream Value Chain
Abu Dhabi, UAE – 8 October 2017 – An expanded and restructured strategic conference programme at the world’s leading annual meeting for senior oil and gas decision makers, the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC), will play a vital role in driving strategic investment decisions across the industry’s full value chain, organisers said today.
Investment in refining and selling the oil and gas industry’s end products, such as fuel, plastics, and petrochemicals, is emerging as a core business strategy among Middle East national oil companies (NOCs) wanting to capture more of the processed value of their natural resource.
ADIPEC’s 2017 strategic programme will be restructured to reflect this change. An expanded programme recognises the conference’s high-level participants – who include some of the world’s most powerful oil and gas CEOs – command businesses that cover the full scope of upstream, midstream, and downstream operations.
“ADIPEC’s guiding purpose is to be the convening power for the global industry, a platform where the industry’s leading CEOs define and refine their strategic direction,” said Ali Khalifa Al Shamsi, Al Yasat CEO and ADIPEC 2017 Chairman. “Although exploration, production and export of crude oil remain the foundation of the region’s NOCs, today’s business models increasingly look beyond this, making downstream investments that accumulate benefits through each value-added process. ADIPEC is committed to acting as a driving force in support of this evolution.”
ADIPEC’s strategic conference programme will include several ministerial sessions and four global business leader sessions, offering panel discussions and interviews with some of the senior government and industry decision makers who are shaping the future of oil and gas. An additional four downstream global business leader sessions will focus exclusively on value-added processes. Specialised sessions within the conference programme will offer knowledge exchange in areas such as security, the offshore and marine sector, and the role of women in the energy industry. For C-level delegates, there will be 10 C-suite dialogues, offering highly exclusive, interactive panel discussions of critical business issues. As well as the strategic conference, ADIPEC offers oil and gas professionals 119 technical sessions catering to all aspects of the industry.
The conference programme sits alongside a world-class commercial exhibition and offers unrivalled one-to-one business networking opportunities, confirming ADIPEC as a deal-making hub where the industry’s most influential decision makers find connections and forge partnerships that will drive future growth.
As a platform for discussing the industry’s most important issues, ADIPEC consistently adapts to meet leadership concerns. From a strong focus on exploration and production during the pre-2014 period of sustained high oil prices, 2015 and 2016 have emphasised innovation and improved efficiency to reduce immediate costs. The latest changes recognise an industry adapting to a new normal. This sees investment returning to exploration and production in anticipation of rising demand, growing interest in natural gas, and a long-term imperative to add value to the resource.
As part of its integrated 2030 Strategy, the Abu Dhabi National Oil Company (ADNOC), which hosts ADIPEC, is creating more profitable downstream and more valuable upstream businesses. The strategy will increase production capacity to 3.5 million barrels of oil per day by 2018; increase gasoline production to 10.2 million tonnes per annum by 2022, and grow petrochemicals production from 4.5 million tonnes in 2016 to 11.4 million tonnes by 2025. It will also diversify its range of high-value innovative plastics solutions. Similar goals are being set by NOCs across the Middle East and beyond.
The emerging business approach seeks to maximise the value of each barrel that NOCs produce, by generating additional revenue from each layer of processing, distribution and sales. As well as generating more revenue, investments along the value chain can smooth out the impact of fluctuations in oil and gas prices, as rising or falling markets affect each layer of the industry differently.
According to analysis by the Boston Consulting Group, low prices for crude oil will often reduce profits for exploration and production, but at the same time will increase profits downstream as inputs become cheaper and buyer demand rises. When the oil price dropped sharply during 2014, margins at major European and Asian refining hubs went up, rising by around 72 per cent in Rotterdam and 57 per cent in Singapore. High prices for crude shift the balance in the opposite direction.
“With our strategic conference programme for 2017, ADIPEC breaks down the division between upstream and midstream sectors, extracting and transporting the natural resource, and downstream value-adding and manufacturing of products for the end customer,” said Christopher Hudson, President – dmg events, Global Energy, which organises ADIPEC.
“All these elements are one industry, and many of the CEOs who will convene at ADIPEC have a growing portfolio of responsibilities for every layer of a global, vertically integrated business. To fulfil our mission as the convening power for the global oil and gas industry, we must enable dialogue and insight across the full scope of their responsibilities and concerns.”
Confirmed speakers for the ADIPEC conference include H. E. Mohammed Barkindo, Secretary General of the Organization of the Petroleum Exporting Countries (OPEC), and H.E. Suhail Mohamed Mazrouei, Minister of Energy of the United Arab Emirates, as well as government ministers from Egypt, Oman, Bahrain, Lebanon, Nigeria and Mexico. They will be joined by CEOs from major NOCs, international oil companies (IOCs) and leading oilfield services firms, as well as top industry experts.
Conference sessions and panel discussions include broad-ranging knowledge exchange on achieving stable and sustainable long-term growth for the industry, including through collaboration and partnerships, innovation and efficiency of operations, enabling smart growth across the value chain, and driving investment into downstream refining and petrochemicals. Change and industry disruption will be important topics, looking at how the petroleum industry can adapt to the changing roles of oil and natural gas in a low-carbon future.
Held under the patronage of His Highness Sheikh Khalifa Bin Zayed Al Nahyan, President of the UAE, hosted by the Abu Dhabi National Oil Company (ADNOC), and organised by the Global Energy division of dmg events, ADIPEC is one of the world’s leading oil and gas events, and the largest in Africa and the Middle East.
ADIPEC will be held at Abu Dhabi National Exhibition Centre from 13 to 16 November 2017.
- ENDS –
Held under the patronage of the President of the United Arab Emirates, His Highness Sheikh Khalifa Bin Zayed Al Nahyan, and organised by the Global Energy division of dmg events, ADIPEC is the global meeting point for oil and gas professionals. Standing as one of the world’s top energy events, and the largest in the Middle East and North Africa, ADIPEC is a knowledge-sharing platform that enables industry experts to exchange ideas and information that shape the future of the energy sector. The 19th edition of ADIPEC 2016 took place from 7-10 November at the Abu Dhabi National Exhibition Centre (ADNEC). ADIPEC 2016 was supported by the UAE Ministry of Energy, Masdar, the Abu Dhabi National Oil Company (ADNOC), the Abu Dhabi Chamber, and the Abu Dhabi Tourism & Culture Authority (TCA Abu Dhabi). dmg Global Energy is committed to helping the growing international energy community bridge gaps by bringing oil and gas professionals face to face with new technologies and business opportunities.
For media enquiries, please contact:
Senior Marketing Manager, DMG Events Global Energy
Twofour54, Park Rotana Offices, 6th Floor
PO Box 769256, Abu Dhabi, UAE
T: +971 (0)2 6970 515
T: +971 4 275 4100
Mark Robinson (English): +971 (0)55 127 9764
Feras Hamzah (Arabic): +971 (0)50 798 4784
For more info: http://www.adipec.com/
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In its latest Short-Term Energy Outlook, the U.S. Energy Information Administration (EIA) forecasts that natural gas-fired electricity generation in the United States will increase by 6% in 2019 and by 2% in 2020. EIA also forecasts that generation from wind power will increase by 6% in 2019 and by 14% in 2020. These trends vary widely among the regions of the country; growth in natural gas generation is highest in the mid-Atlantic region and growth in wind generation is highest in Texas. EIA expects coal-fired electricity generation to decline nationwide, falling by 15% in 2019 and by 9% in 2020.
The trends in projected generation reflect changes in the mix of generating capacity. In the mid-Atlantic region, which is mostly in the PJM Interconnection transmission area, the electricity industry has added more than 12 gigawatts (GW) of new natural gas-fired generating capacity since the beginning of 2018, an increase of 17%.
This new natural gas capacity in PJM has replaced some coal-fired generating capacity—6 GW of coal-fired generation capacity has been retired in that region since the beginning of 2018. The Oyster Creek nuclear power plant in New Jersey was also retired in 2018, and the Three Mile Island plant in Pennsylvania plans to shut down its last remaining reactor this month.
These changes in capacity contribute to EIA’s forecast that natural gas will fuel 39% of electricity generation in the PJM region in 2020, up from a share of 31% in 2018. In contrast, coal is expected to generate 20% of PJM electricity next year, down from 28% in 2018. In 2010, coal fueled 54% of the region’s electricity generation, and natural gas generated 11%.
Source: U.S. Energy Information Administration, Short-Term Energy Outlook
Wind power has been the fastest-growing source of electricity in recent years in the Electric Reliability Council of Texas (ERCOT) region that serves most of Texas. Since the beginning of 2018, the industry has added 3 GW of wind generating capacity and plans to add another 7 GW before the end of 2020. These additions would result in an increase of nearly 50% from the 2017 wind capacity level in ERCOT. EIA expects wind to supply 20% of ERCOT total generation in 2019 and 24% in 2020. If realized, wind would match coal’s share of ERCOT's electricity generation this year and exceed it in 2020.
Source: U.S. Energy Information Administration, Short-Term Energy Outlook
Natural gas-fired generation in ERCOT has fluctuated in recent years in response to changes in the cost of the fuel. EIA forecasts the Henry Hub natural gas price will fall by 21% in 2019, which contributes to EIA’s expectation that ERCOT’s natural gas generation share will rise from 45% in 2018 to 47% this year. Although EIA forecasts next year’s natural gas prices to remain relatively flat in 2020, the large increase in renewable generating capacity is expected to reduce the region’s 2020 natural gas generation share to 41%.
Headline crude prices for the week beginning 9 September 2019 – Brent: US$61/b; WTI: US$56/b
Headlines of the week
Detailed market research and continuous tracking of market developments—as well as deep, on-the-ground expertise across the globe—informs our outlook on global gas and liquefied natural gas (LNG). We forecast gas demand and then use our infrastructure and contract models to forecast supply-and-demand balances, corresponding gas flows, and pricing implications to 2035.Executive summary
The past year saw the natural-gas market grow at its fastest rate in almost a decade, supported by booming domestic markets in China and the United States and an expanding global gas trade to serve Asian markets. While the pace of growth is set to slow, gas remains the fastest-growing fossil fuel and the only fossil fuel expected to grow beyond 2035.Global gas: Demand expected to grow 0.9 percent per annum to 2035
While we expect coal demand to peak before 2025 and oil demand to peak around 2033, gas demand will continue to grow until 2035, albeit at a slower rate than seen previously. The power-generation and industrial sectors in Asia and North America and the residential and commercial sectors in Southeast Asia, including China, will drive the expected gas-demand growth. Strong growth from these regions will more than offset the demand declines from the mature gas markets of Europe and Northeast Asia.
Gas supply to meet this demand will come mainly from Africa, China, Russia, and the shale-gas-rich United States. China will double its conventional gas production from 2018 to 2035. Gas production in Europe will decline rapidly.LNG: Demand expected to grow 3.6 percent per annum to 2035, with market rebalancing expected in 2027–28
We expect LNG demand to outpace overall gas demand as Asian markets rely on more distant supplies, Europe increases its gas-import dependence, and US producers seek overseas markets for their gas (both pipe and LNG). China will be a major driver of LNG-demand growth, as its domestic supply and pipeline flows will be insufficient to meet rising demand. Similarly, Bangladesh, Pakistan, and South Asia will rely on LNG to meet the growing demand to replace declining domestic supplies. We also expect Europe to increase LNG imports to help offset declining domestic supply.
Demand growth by the middle of next decade should balance the excess LNG capacity in the current market and planned capacity additions. We expect that further capacity growth of around 250 billion cubic meters will be necessary to meet demand to 2035.
With growing shale-gas production in the United States, the country is in a position to join Australia and Qatar as a top global LNG exporter. A number of competing US projects represent the long-run marginal LNG-supply capacity.Key themes uncovered
Over the course of our analysis, we uncovered five key themes to watch for in the global gas market: