Abu Dhabi – the oil powerhouse at the centre of the U.S.’s pushback against increasing Chinese influence across the Middle East – last week further cemented this alliance with a dramatic re-organisation of its government to further empower its oil sector, and the awarding of further oil concessions to U.S.-friendly firms. Both of these developments were in line with plans to boost the crude oil production of the chief corporate proxy in this U.S.-Israel strategy – the Abu Dhabi National Oil Co (ADNOC) – from around the current 4 million barrels per day (bpd) to at least 5 million bpd by 2030 at the latest, and to increase its gas output as well.
For a long time, a huge hurdle for Abu Dhabi’s plans to dramatically increase oil revenues has been the reticence of various members of its Supreme Petroleum Council (SPC) to endorse any proposals regarded as not in keeping with the broadly conservative nature of the Emirate. This reticence persisted despite the March-April 2020 Oil Price War having left the Emirate with a projected budget breakeven oil price of US$69.1 per barrel of Brent for the year, according to IMF figures, whilst Brent struggled to trade over US$50 per barrel during that time.
The pressure to plug budget gaps and to fund plans to safeguard oil production levels resulted in a statement on 23 June from ADNOC that it had agreed to sell a 49 per cent stake in its gas pipelines for just over US$10 billion to a consortium of international investors, subject to the standard regulatory approvals. It also opened the way to China increasing its expansion efforts into the UAE and, as a counter to this move into yet another of the Middle Eastern states made economically vulnerable by the Saudi-instigated 2020 Oil Price War, to the UAE being top of the list for a relationship normalisation with the U.S.-Israel axis.
Last week, though, Abu Dhabi ruler Sheikh Khalifa bin Zayed Al Nahyan issued a decree to re-organise the SPC into a more oil- and economy-friendly Supreme Council for Financial and Economic Affairs, which will be chaired by Abu Dhabi Crown Prince Mohamed bin Zayed, who was formerly the vice-chairman of the SPC. He will now oversee this new version of the SPC, which will cover all of Abu Dhabi’s financial, investment, economic, petroleum and natural resources affairs. The new iteration of the SPC will comprise of board members with a limited tenure of just three years, including in the first instance the Minister of Industry and Advanced Technology, Sultan al-Jaber, who is also the chief executive officer of ADNOC. Khaldoun al-Mubarak, chief executive officer of the Abu Dhabi sovereign wealth fund Mubadala Investment Co will also be an initial board member.