Come together: Landmark consolidation efforts present opportunities for the sector to capitalise on potential synergies


Under new leadership, Abu Dhabi National Oil Company (ADNOC) is set to become a more streamlined organisation in 2017, as steering groups work through the fine details of two landmark consolidations; the first concerning two offshore oil companies, and the second relating to three shipping and marine services companies. After two years of challenging trading conditions in global energy markets, leveraging synergies between these business units is expected to enable the parent group to reduce operational expenditures.

At the same time, the company continues to manage partnerships with international oil companies (IOCs), some of which have been shareholders for decades in many businesses under the ADNOC umbrella. A renewed focus on ADNOC’s corporate regime is also likely to take centre stage under the company’s 2030 strategy, prepping the next generation of Emirati leaders. The consolidation of three educational institutions into a single globally competitive university, coupled with the work undertaken around training by many of ADNOC’s operating companies, means future employees will be better prepared to handle the opportunities and challenges in the energy industry.


One of the main focal points of new efficiency measures in 2016 and 2017 has been ADNOC’s offshore operations, via its offshore subsidiary the Abu Dhabi Marine Operating Company (ADMA-OPCO). Early 2016 saw ADMA-OPCO endorse its revised budget for that year and form a taskforce with its international shareholders to identify further cost-optimisation measures to reduce the 2016 per barrel operating cost by 15%.

In October 2016 a more substantial measure was announced. ADMA-OPCO was to merge with the company’s other offshore business, Zakum Development Company (ZADCO). Yasser AlMazrouei, who had previously managed Upper Zakum field development at ZADCO, became the CEO of the combined business. ADNOC owns a 60% stake in both offshore companies, with the remaining 40% in the hands of IOCs operating concessions. In the case of ADMA-OPCO, BP’s share is 14.66%, while Total and Japan Oil Development Corporation (JODCO) own 13.33% and 12%, respectively. JODCO also owns 12% of ZADCO, while ExxonMobil holds 28% of the other offshore company. The joint venture partners in both firms have been told they will be fully involved in consolidation plans, which are due to be completed by 2018. “The integration of the group’s offshore assets is in line with this new strategy of evolving into an efficient, streamlined and performance-driven organisation,” AlMazrouei, told OBG. “Economically speaking, merging offshore assets will help maximise value, drive profitability and deliver greater returns to all shareholders. It will unify offshore experience, and streamline governance and decision-making. In the meantime, the integration will enable the group to become more agile and responsive to any future market dynamics, while providing strategic opportunities for future growth and advanced technology integration.”

Shipping Company

In the same month the ADMA-OPCO consolidation was announced, ADNOC also finalised changes to its shipping and marine services portfolio, integrating the Abu Dhabi National Tanker Company (ADNATCO), petroleum services company ESNAAD and Abu Dhabi Petroleum Ports Operating Company (IRSHAD). The move targeted improved and more cost-effective services that will allow the newly integrated company to extend its reach to global customers, leveraging combined experience in international shipping, port management, oilfield services and logistics, single point mooring terminal maintenance services and petroleum products storage.

Under the terms of the consolidation, ADNATCO will be de-merged from its sister company, the National Gas and Shipping Company (NGSCO). Although 30% of equity in NGSCO is collectively owned by Japan’s Mitsui & Co, BP and Total, ADNATCO is fully owned by ADNOC, as is ESNAAD and IRSHAD. This means the new merged shipping and marine services business will be fully owned by the parent company when this consolidation is completed at the end of 2017. The combined entity will operate a total of 165 vessels, including liquefied natural gas, bulk carriers, chemical and products tankers, container and container feeder vessels, as well as multi-purpose and support vessels.

Human Capital

Streamlining the five companies’ operations will also present an opportunity to restructure the workforce in line with the stated aims of efficiency raising and cost optimisation. The two upstream companies are significant employers; ZADCO’s Zirku Island, 140 km north-west of Abu Dhabi City, hosts 3000 workers, while the accommodation platform serving its Upper Zakum field has living space for 600 people. More than 3000 workers live and work on Das Island. On the marine services side of the business, ESNAAD had 1300 employees before the consolidation announcement, with some at sea in its 53 vessels and others working at its Mussafah Base 40 km from Abu Dhabi City.

Prior to the announcement of its de-merger, ADNATCO and NGSCO had around 150 staff working in its offices, 66% of which were Emirati, while only 11% of marine personnel on the ADNATCO side of the business were UAE nationals. According to ADNOC’s “Sustainability Report 2015”, the company as a whole had 65,000 staff and used 165,000 contractors that year. Emirati nationals accounted for 34.1% of employees, while workers from Bangladesh, India, Pakistan and the Philippines collectively made up 42.1%. Some 3.7% of the workforce was from North and South America, Europe and Australia. By age, 31% were under 30, 56% were 30 to 50, and 13% were over 50. Women represented 10.3% of employees. The number of employees and contractors had grown from the figures cited in the “Sustainability Report 2014”, which noted there were 60,000 staff and 97,500 contractors at ADNOC.

Training Drive

Although it is too early to say what form the restructuring of the workforce will take, skills and knowledge development remains a central aim of ADNOC. According to ADNOC’s 2030 Strategy, unveiled in November 2016, new employees will join an integrated energy business determined to develop internationally competitive talent. There will be a focus on younger employees spending more time in the field, with their performance appraised as part of a new human relations master plan. ADNOC was also planning to introduce a stronger “leadership pipeline” to ensure that those identified as future leaders are exposed to all aspects of the business, and schooled in a company-wide management and leadership style supported by a lifelong learning culture. Individual staff performance will also be linked to business performance, with each part of the company given key performance indicators.

New Institution

ADNOC’s human resources are likely to receive an additional boost through the merging of the Petroleum Institute (PI), Khalifa University of Science, Technology and Research, and Masdar Institute, a move that was first announced in October 2016.

PI was opened to students in 2001, serving as an ADNOC-funded engineering university specialising in research within energy-related fields and improving ADNOC’s internal knowledge base. PI was also tasked with developing ways to boost recovery rates by 5%, and the institution enjoyed a unique relationship with both the national oil company and the many IOCs that were concession holders in Abu Dhabi. In the 2015/16 academic year PI had 2205 students, including 1840 undergraduates and 365 enrolled in graduate studies.

In February 2017 a resolution was issued to establish the Khalifa University of Science and Technology, with all administration, faculty and assets of the three separate institutions to be transferred to the unified entity. Khalifa University of Science and Technology is expected to greatly enhance the scientific research capabilities and international reputation of the school’s programmes, and train the next generation of students across a wide variety of disciplines, including energy.