12 - 14 Dec 2018

UAE-China investments: a bedrock of mutual economic growth

The global economic landscape is changing rapidly and so is the investment model and the way public and private companies do multibillion-dollar cross-border deals.

Partnerships - mutually beneficial partnerships - are what matters in the new global investment scene and there’s no better exponent of this model in the Arabian Gulf region than the UAE.

It is only natural for the UAE to solidify its investment ties with China - the world’s second-biggest economy and the UAE’s top global trading partner - and encourage new relationships between public and private sector companies to equally benefit both economies. To deepen economic ties with the UAE, the GCC's second-biggest economic powerhouse, which accounts for about 4.5 per cent of the world’s total crude output, also chimes well with China’s growth ambitions beyond its border, getting a foothold in the emerging economies of the Middle East and Africa through its Belt and Road initiative.

The push to open more sectors where public and private entities can invest further and expand the existing investment base in vital sectors such as transport, finance and oil and gas, is quite evident from both governments.

Abu Dhabi National Oil Company (Adnoc) is the latest Abu Dhabi entity exploring ways to further build its investment relations with major Chinese oil and gas firms, as the state-controlled producer intends to enhance its share of crude exports to China, one of the world’s biggest oil importers.

Adnoc Group chief executive, Dr Sultan Al Jaber, who is also the UAE State Minister, held a series of meetings with Chinese oil, gas, refining and petrochemical industry firms during his recent visit to Beijing. The discussions with senior executives from Wanhua Chemical Group, China National Petroleum Corporation (CNPC) and China National Offshore Oil Corporation, representatives from the China Development Bank and top officials of National Development and Reform Commission, focused on exploring investment opportunities across Adnoc’s integrated upstream and downstream value chain.

The pursuit of the UAE - China’s biggest investment destination in the Middle East - for enhanced energy cooperation with the Asian giant doesn’t come as a surprise as crude consumption in China is set to rise 4.6 per cent year-on-year to 12.05 million barrels per day this year, according to estimates by CNPC’s research division. Consumption of refined products such as plastics and compounds, which are vital for Chinese growth and development of its expanding middle class, is forecast to grow about 31 per cent year-on-year to 47.8 million tonnes in 2018.

In March, CNPC picked up two stakes worth Dh4.3bn in offshore fields in Abu Dhabi. PetroChina, which is majority-owned by CNPC, was awarded a 10 per cent interest both in Umm Shaif and Nasr as well as the Lower Zakum concessions.

“Energy cooperation is an important aspect of the UAE’s relations with China, which is the number one oil importer globally and a major growth market for Adnoc’s crude, refined products and petrochemicals,” Dr Al Jaber said earlier this month. “There are mutually beneficial partnership and co-investment opportunities across our upstream and downstream value chains. Adnoc is also ready to work with its existing and potential new partners to meet the growing demand for energy and petrochemical products in China.”

The Abu Dhabi oil major, which revamped its business model earlier this year, has also received strong interest from Chinese firms for onshore and offshore oil and gas concessions being offered in the first-ever round of competitive bidding proposed as part of its new partnership model, Tayba Al Hashemi, acting CEO of Adnoc unit Al Yasat Petroleum told a conference in May in Beijing.

“The release of the six blocks for competitive bidding represents a rare and exciting opportunity to invest in the UAE’s stable and secure exploration and production sector,” Dr Al Jaber, who has steered Adnoc through its transformation in recent years, said in a statement earlier this month.

Source: The National/Sarmad Khan

Published: 07/21/18