ADNOC says several Japanese firms are mulling using Murban futures to price their oil

Abu Dhabi National Oil Co, the UAE’s biggest energy producer, and ICE Futures Abu Dhabi have signed agreements with several Japanese end-users to explore pricing their oil against the Murban futures contract to be launched on March 29, the national oil producer said Jan. 14.

Cosmo Oil Co., a shareholder in Abu Dhabi Oil Co., and other unnamed Japanese end-users signed the agreements during a virtual meeting, ADNOC said in its statement.

Cosmo Oil couldn’t immediately be reached for comment on the matter.

The UAE is Japan’s second-largest crude supplier after Saudi Arabia and Tokyo has a number of stakes in Abu Dhabi’s oil assets.

The Intercontinental Exchange is on track to begin trading of the futures contract, underpinned by ADNOC’s flagship Murban crude grade, on March 29, Stuart Williams, president of ICE Futures Europe, told the Gulf Intelligence Global UAE Energy Forum Jan. 13.

ICE and ADNOC announced plans in November 2019 to launch a derivatives trading platform, to be hosted on the new ICE Futures Abu Dhabi exchange, in partnership with nine international energy companies. But plans for a 2020 start-up were delayed due to the COVID-19 pandemic.

ADNOC and ICE are partnering with BP, GS Caltex of South Korea, INPEX and ENEOS of Japan, PetroChina, PTT, Shell, Total and Vitol to launch IFAD.

The breakdown of shareholding has not been disclosed.

US agreements
The agreements with Japanese firms follow the signing of memorandums of understanding with Chevron, Trafigura and Occidental to explore using Murban futures to price US crude heading to Asia.

Murban is ADNOC’s largest crude by volume, with a production capacity of about 2 million b/d. ADNOC’s other crude grades are Upper Zakum, Das and Umm Lulu.

Murban will be the second physically delivered futures contracts traded on a regional exchange after Dubai Mercantile Exchange’s Oman crude futures.

It is also a deliverable grade in the S&P Global Platts benchmark Dubai and Oman crude assessments.

BP (10%), Total (10%), INPEX (5%) and GS Caltex (3%) are equity shareholders in ADNOC Onshore, which produces the Murban grade, with ADNOC retaining a 60% stake in the concession. The other ADNOC Onshore partners are CNPC (8%) and ZhenHua Oil (4%).

Long relationship
The agreements signed with the Japanese end-users build on a long relationship between Tokyo and Abu Dhabi.

In January last year, ADNOC signed an agreement with Japan’s Agency for Natural Resources and Energy to store over 8 million barrels of oil at facilities in the world’s third-largest economy. The agreement extended and expanded a storage agreement between the two countries that expired at the end of 2019.

Also in 2019, INPEX won exploration rights for ADNOC’s Abu Dhabi Onshore Block 4. In 2018, INPEX won a 10% stake in ADNOC’s new Lower Zakum offshore concession, and was also awarded an extension to its 40% stake in Satah field, and an increase in its shareholding in Umm Al Dalkh field from 12% to 40%. INPEX was awarded a 5% stake in the Abu Dhabi Onshore Concession in 2015.
Source: Platts