Adnoc’s Murban crude futures start trading

ABU DHABi / WAM

The Abu Dhabi National Oil Company (Adnoc) and Intercontinental Exchange (ICE) on Monday, officially celebrated the start of trading of the United Arab Emirate (UAE) flagship crude oil, Murban, as a Futures contract on the new ICE Futures Abu Dhabi (IFAD) commodities exchange.
During a high-profile launch event at Abu Dhabi Global Market (ADGM), attended by HH Sheikh Mansour bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs, ICE, Adnoc and the partners in ICE Futures Abu Dhabi, marked the start of trading for Adnoc’s Murban crude oil on ICE Futures Abu Dhabi, a significant milestone for Abu Dhabi and the UAE in its jubilee year.
The introduction of the world’s first Murban Futures contract is the latest step in Adnoc’s ongoing transformation into a more market and customer centric organisation. By making Murban a freely traded crude, similar to Brent or WTI, customers have better price transparency, flexibilty to hedge and manage risks and increased access to Murban crude. For Adnoc, its flagship crude grade becomes more available to a broader set of market participants around the world.
Alongside ICE and Adnoc, nine of the world’s largest energy companies and traders are joining IFAD as founding partners. This includes BP, GS Caltex, Inpex, Eneos, PetroChina, PTT, Shell, Total and Vitol. Representatives from the partner companies joined Monday’s launch event
at ADGM, many participating
virtually from around the world.
Commending the landmark launch of Murban Futures Contracts, HH Sheikh Mansour said: “This historic decision falls within the strategy of the UAE and the vision of the wise leadership, which aims to increase the economic achievements and consolidate the honourable position of UAE and its leadership on global competitiveness map, and in support of its leading role internationally in oil market, as a basic resource, in order to ensure continuation of distinguished
development successes.”
HH affirmed that the state is keen to keep pace with the changes and developments of the energy sectors, based on forward-looking plans that are capable of achieving prosperity, progress and the development of national wealth, in the service of the people of the UAE and opening promising horizons for them.
He valued the diligent efforts being made by Adnoc to launch qualitative projects and initiatives, which constitutes a central source and support to the national economy.
In attendance also were Suhail bin Mohammed Al Mazrouei, Cabinet Member and Minister of Energy and Infrastructure,Khaldoon Khalifa Al Mubarak, Group CEO and Managing Director of Mubadala Investment Company, Jassim Mohammed Buatabh Al Zaabi, Chairman of the Department of Finance, Awaidha Murshed Ali Al Marar, Chairman of the Abu Dhabi Department of Energy, Khalifa Al Suwaidi, Chairman of ICE Futures Abu Dhabi (IFAD), in addition to representatives of partner companies.
Commemorating the new Murban Futures contract, Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology and Adnoc Managing Director and Group CEO, said: “This is a historic moment for Adnoc, Abu Dhabi, and the UAE as we celebrate the launch of the IFAD exchange with ICE and, with our partners, capitilise on the growing demand for high-quality Murban crude oil, particularly from markets in Asia. This achievement is testament to the vision and foresight of our wise leadership, who have supported this progressive step that makes Murban crude a freely traded commodity that is more widely available to buyers and traders around the world.”
“The launch of the world’s first Murban Futures contract makes our largest crude grade even more attractive to the global market, enabling Adnoc’s customers and market participants to better price, manage and trade their purchases of Murban. Murban Crude is recognized the world over for its intrinsic chemical qualities, consistent and stable production volumes, large number of international buyers, and numerous long-term concession and production partners. In making Murban a freely traded global commodity, it becomes even more attractive to market participants and will deliver greater value to Adnoc and its partners. This historic and strategic milestone reinforces the UAE and Abu Dhabi’s status as a leading global energy hub and underscores Adnoc’s central role as a catalyst to empower the UAE’s economic ambitions.”
Earlier this month, Adnoc announced that its Murban, Upper Zakum, Das and Umm Lulu crude grades will all be sold destination free, from June, allowing its crude oils to become a freely-traded commodity.
Discovered in 1958, Murban has played a pivotal role as the bedrock of the UAE’s sustained economic development. With the launch of IFAD and the new Murban Futures Contract, it enters a new era, further solidifying Abu Dhabi’s position as a global energy hub and a reliable and essential energy provider to the world.
ICE Murban Futures are physically delivered contracts, with one futures contract equating to 1,000 barrels of Murban crude oil delivered from the Adnoc Terminal located in Fujairah, on the East coast of the UAE. Murban is Adnoc’s flagship crude grade, with production capacity of over 2 million barrels per day at present. It currently accounts for around 50 percent of the UAE’s total production capacity, with plans in place to increase the production of Murban to more than 2.5 million barrels per day by 2030, in line with Adnoc’s goal of growing its production capacity to 5 million barrels of crude per day.
Jeffrey C. Sprecher, Chairman and CEO of Intercontinental Exchange, said: “”The launch of IFAD represents a singular achievement, one that would not have been realised without the vision, fortitude and years of work by Dr Sultan, his team at Adnoc, and the leadership of the UAE in opening up Murban to the markets,” said Jeffrey C. Sprecher, Founder, Chairman and CEO of Intercontinental Exchange. “Today, with our outstanding partners, we are bringing a new benchmark to life, and just as Murban has powered the UAE for the past 50 years, with this new futures contract there is a tremendous future ahead for Murban as a price marker for global energy markets.”
Dr Al Jaber will, later today, virtually ring the opening bell of the iconic New York Stock Exchange, another of the international exchanges owned and operated by ICE, to celebrate the launch of IFAD and the new Murban Futures contract.
Ahmed Ali Al Sayegh, Minister of State (UAE) and Chairman of Abu Dhabi Global Market, said: “Our sincere congratulations to the Intercontinental Exchange, Abu Dhabi National Oil Company and the nine global energy companies, on the successful launch of ICE Futures Abu Dhabi exchange (IFAD). This is the first derivatives exchange in Abu Dhabi and set up at ADGM. We are proud to be the preferred jurisdiction of IFAD and home to the world’s foremost Murban Crude Oil Futures contract. The launch of ICE Futures Abu Dhabi further reinforces Abu Dhabi’s status as a global energy hub. We are fully supportive of and look forward to the continuous achievements and growth of our home-grown institutions, IFAD and the derivatives community in the UAE and beyond.”
Murban Futures will trade globally on the ICE platform, one of the world’s foremost energy exchange networks. All trades clear through ICE Clear Europe, based in London. From today, Murban now trades alongside ICE Brent and ICE WTI in the ICE network.
Adnoc moved to forward pricing of its crude oil in March 2020 and previously priced Murban using Platts Dubai to determine its official selling price (OSP). The company will move its forward pricing mechanism for Murban to the ICE Murban Futures Contract from June, coinciding with the first expiry of Murban Futures.
Earlier this month, the company also confirmed that Upper Zakum, Das and Umm Lulu grades will be priced at a differential to the announced Murban price. While the new ICE Murban Futures Contract will be used to identify the price of Murban two months ahead, Adnoc will announce the price for Upper Zakum, Das and Umm Lulu crude grades early in the month before the month of loading (known as M-1).
The market-based, forward pricing mechanism for Adnoc’s Murban Crude enhances the attractiveness of Murban, creating additional transparency and flexibility for market participants and Adnoc’s customers.
As the new home of Murban Futures, Abu Dhabi Global Market has quickly established its place as a leading commodities trading center, and IFAD joins two international market-facing trading entities, Adnoc Global Trading and Adnoc Trading. The Murban Futures contract launches Abu Dhabi’s mainstay crude onto the global energy markets and strengthens the UAE position as an energy hub and leader.