Abu Dhabi's New Oil Head Comes From Investment Side

  • State oil company seeking partners for biggest oil deposits
  • Sultan Al Jaber adds renewable energy, investment expertise

Abu Dhabi, the Persian Gulf emirate that holds about 6 percent of global crude reserves, replaced the head of its state oil company with an executive who spent the last 10 years investing in energy as prices languish near a 12-year low.

Sultan Al Jaber was named director general of Abu Dhabi National Oil Co., succeeding Abdulla Nasser Al Suwaidi, who had the job since June 2011, state-run Emirates News Agency reported, citing a government decree. Al Jaber, 42, joins Adnoc from Abu Dhabi’s investment fund, Mubadala Development Co., where he is chief executive officer of the energy unit. For Al Jaber, who is also a government minister, the new appointment is a return to the company where he worked as a process engineer between 1997 and 2002.

The 44 percent drop in oil prices in the past year has discouraged foreign investment in Middle East crude producing nations, leading to government spending cuts and reduced subsidies. The United Arab Emirates, of which Abu Dhabi is the capital, still plans to boost crude production capacity to 3.5 million barrels a day by 2017. In January, production was 2.97 million barrels a day, according to data compiled by Bloomberg.

’Ambitious plan’

Abu Dhabi has “quite an ambitious plan in terms of production growth,” Robin Mills, chief executive officer at Qamar Energy in Dubai, said by phone Tuesday. “It’s been moving quite slowly, so there is clearly a need to push on.”

Adnoc last year failed to award all of the development rights it had offered for its largest onshore oil fields and it’s set to begin looking for partners for its offshore fields this year. Last month, Royal Dutch Shell Plc pulled out of a $10 billion natural gas project in the emirate.

Al Jaber may seek to revive efforts to bring more partners into the venture running its biggest onshore oil fields, Mills said.

Shell, Exxon Mobil Corp. and BP Plc dropped out of a partnership producing oil from U.A.E. onshore fields in January 2014 when their concession expired. A year later, Total SA, one of the previous partners, Japan’s Inpex Corp. and GS Energy Corp. of South Korea won stakes totaling 18 percent of a new venture to run the same fields. That leaves 22 percent of the venture to be awarded to foreign firms if Abu Dhabi decides to maintain its 60 percent interest. A similar concession for oil deposits in the Persian Gulf in which foreign partners also own 40 percent expires in 2018.

Renewable energy

Al Jaber’s current role as head of Mubadala’s energy business includes its renewables unit, which he headed from its start in 2006, and the company’s oil and gas interests, including development projects in Thailand, according to information on the Mubadala website. Since 2013, he’s served as a minister of state in the U.A.E. foreign ministry where he’s focused on climate change and the country’s policies toward Egypt. Al Jaber is also set to take Al Suwaidi’s post on Abu Dhabi’s Supreme Energy Council, the emirate’s main energy policy body.

At Masdar, Al Jaber presided over the start of the company’s 100-megawatt Shams 1 solar power plant. The facility in the emirate’s desert was the Middle East’s largest using concentrated solar panel technology when it opened in 2013. The company also invested in U.K. offshore wind farms and Spanish solar projects.

Al Jaber has a chemical engineering degree from the University of Southern California and a doctorate in business and economics from Coventry University, in the U.K. From 1997 to 2002, he worked on several natural gas projects at an Adnoc unit. He also negotiated for Mubadala’s stake in an Omani gas development as a project manager from 2004 to 2006, according to information provided by the company.

Bringing Al Jaber back to Adnoc may indicate that Abu Dhabi aims to combine the two strands of its energy industry to better coordinate oil and gas with renewable resources, according to Allison Wood, a Middle East and North Africa analyst at Control Risks in Dubai.

“Renewable energy is something the U.A.E. has been talking about for a while,” Wood said by phone Tuesday. Al Jaber’s “appointment points to a way of approaching old issues with a new view.”

(Corrects ownership in seventh paragraph of story that moved Feb. 16.)
Before it's here, it's on the Bloomberg Terminal.