What's Behind ADNOC’s New Low-Carbon Energy Investment Firm?
Oil and gas giant ADNOC has launched a US$80bn business to focus on global lower-carbon energy and chemicals investments.
XRG was unveiled by Abu Dhabi National Oil Company, with a pledge that it will build on "the transformation of energy, exponential growth of AI and the rise of emerging economies".
ADNOC Group said on LinkedIn: “The world needs more energy, with fewer emissions, for more people than ever before. Enter XRG.
“We are investing across three platforms – chemicals, gas and low-carbon energies – on an unprecedented scale, building on a US$80bn portfolio of assets to enable a smarter, cleaner and more sustainable energy future.”
How will XRG work?
In keeping with the US$80bn portfolio of assets, the vision for the new business is big.
Dr Sultan Ahmed Al Jaber, ADNOC Managing Director and Group CEO, said: “In line with our Board mandate to prioritise transformational growth, XRG marks a bold new chapter for ADNOC.
“Building on our unrivalled track record in energy and investments, network of global partners and strategic market access, XRG will drive sustainable economic growth, foster technological innovation and deliver the energy and products needed to improve lives around the world.”
According to ADNOC, XRG “aims to more than double its asset value over the next decade by capitalising on demand for low-carbon energy and chemicals driven by three megatrends: the transformation of energy, exponential growth of AI, and the rise of emerging economies”.
The Sultan added: “We are committed to delivering long-term value for our stakeholders and reinforcing Abu Dhabi and the UAE’s role as a global energy and chemicals leader.’’
Three core strategic value platforms
ADNOC says the independently-operated new business will build on its expertise and “transformational international acquisitions”, focussing initially on developing three core strategic value platforms:
- Global Chemicals platform: aims to be a “top 5 global chemicals player”, producing and delivering chemical and specialty products “essential for modern life”, to meet the projected 70% increase in global demand by 2050
- International Gas platform: designed to build a “world-scale integrated gas portfolio to help meet the anticipated 15% increase in global natural gas demand over the next decade, as a lower-carbon transition fuel”, as well as meet the expected 65% increase in demand for LNG by 2050
- Low Carbon Energies platform: will invest in the solutions needed to meet increasing demand for low-carbon energies and decarbonisation technologies to drive economic growth through the energy transition. ADNOC says: “The market for low carbon ammonia alone is expected to grow by between 70-90 million tonnes per annum by 2040, from close to zero now.”
Dealing in big numbers
The company aims to more than double its asset value in the next decade and will initially focus on transformational global investments when it begins operating in the first quarter of 2025.
ADNOC has made a host of acquisitions in gas and chemicals.
Earlier this month, German plastics and chemicals maker Covestro said its management and supervisory boards supported ADNOC's US$16.3bn takeover offer.
The Covestro deal is one of the largest foreign takeovers by a Gulf state as countries in the region seek to reduce their dependence on oil amid the global switch to cleaner energy.
XRG was announced following an ADNOC board meeting, chaired by UAE President Sheikh Mohammed bin Zayed Al Nahyan.
ADNOC's board also approved directing 200 billion dirhams (US$54.45bn) to the local economy over the next five years as part of the oil company's in-country value programme.
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