Abu Dhabi Fund Seeks Energy Stakes After Spending $5 Billion

Updated on
  • Investments made in past few months in U.S., Vietnam
  • Oil demand ‘exceeding our expectation’: Al Kaabi on Bloomberg
Mubadala's Al Kaabi Has Positive Outlook on Oil

Abu Dhabi’s state fund is looking to expand its energy investments, with $5 billion spent in the past few months in nations that can offer low costs such as the U.S., according to the head of Mubadala Investment Co.’s oil and chemicals projects.

“If you think about the low cost environment, the U.S. ranks very high because of the feedstock,” Musabbeh Al Kaabi, the chief executive officer overseeing Mubadala’s petroleum and petrochemicals, said Monday in an interview in Abu Dhabi. “The natural gas is relatively attractive and the expansion in the petchem in the U.S. is big.”

The current oil price is good for oil and gas investment, Al Kaabi said earlier in an interview on Bloomberg TV from Abu Dhabi where hundreds of energy executives were meeting at a conference. Oil demand is “exceeding our expectation,” he said. In recent months, Mubadala has spent $1.7 billion on a chemicals joint venture in the U.S. with Borealis AG and Total SA, and an additional $2.1 billion on chemicals in Louisiana. It’s also expanding in Vietnam.

Brent crude, a global benchmark, has climbed the past five consecutive weeks, and is trading close to the highest in two years. The January contract traded at $63.43 a barrel at 2:49 p.m. in London on Monday.

Reviewing Portfolio

Mubadala manages about $125 billion in assets after the merger this year of two state investment companies with holdings from aerospace to energy to infrastructure. The government-owned investment vehicle is reviewing its portfolio as a step toward the possible sale of some businesses or holdings, people familiar with the matter said earlier this month.

The company is now producing about 500,000 barrels of crude a day, with major projects in Southeast Asia and North America, Al Kaabi said. “We believe in the energy landscape in the U.S.,” he said.

Mubadala Petroleum is looking to expand operations in Thailand, U.A.E. Energy Minister Suhail Al Mazrouei said on Nov. 2. The company also owns an enhanced oil recovery project in Oman, according to its website.

Abu Dhabi, capital of the United Arab Emirates, an OPEC state, holds about 6 percent of the world’s proven oil reserves. Mubadala -- the world’s 14th-largest fund, according to the Sovereign Wealth Fund Institute -- is part of Abu Dhabi’s effort to turn oil revenue into profitable investments while also attracting technology and jobs. It completed a merger with Abu Dhabi’s International Petroleum Investment Co. earlier this year.

Al Kaabi is responsible for Mubadala’s petroleum and petrochemicals businesses, including Mubadala Petroleum, owner of the Dolphin Gas pipeline. The pipeline is used to send natural gas from Qatar to the United Arab Emirates, which depends on imported gas to generate half its electricity. Qatar is the world’s largest exporter of liquefied natural gas.

— With assistance by Fatma Abusief, and Hussein Slim

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