A worrying trend for international oil giants
By Dr. Cyril Widdershoven – Berry Commodities – Global Head of Strategy & Risk
International ratings agency Fitch has awarded the Abu Dhabi National Oil Company (ADNOC) a stand-alone credit rating of AA+. This rating is evidence of ADNOC?s ongoing transformation from a traditional NOC into a more commercially-driven and innovative organization. The AA+ rating is the highest that Fitch gives out to companies in the energy sector. The ratings agency reiterated that a standalone rating only takes into account an entity?s creditworthiness without including the ecosystem connected to it. The most remarkable fact at present is that ADNOC has a higher rating than the sovereign rating of its main shareholder, the government of Abu Dhabi. The Abu Dhabi NOC holds vast reserves and a high (and expanding) upstream output, which is combined with low production costs, strong downstream integration and a conservative financial profile.
ADNOC has clearly outperformed its main IOC rivals, such as Petrochina, Shell, BP and Total, which are rated A+, AA-, A and AA- respectively by Fitch. The ADNOC rating came after the successful downstream IPOs put in place by the NOC, such as ADNOC distribution. At present, ADNOC holds around 4.2 per cent of the global production of crude, almost all produced and owned in Abu Dhabi. In 2018 ADNOC increased its hydrocarbon reserves by 1 percent, while adding 7.1 percent of proven gas reserves. Last month, several mainstream IOCs, such as ENI, were awarded several new oil and gas concessions, targeting additional reserve and production expansions. With a production capacity of 3.5 million bpd, ADNOC is already in the top league of producers, but by 2020 it expects its production to increase to 4 million bpd, rising to 5 million bpd by 2030. Possible growth is also expected in local gas production as Abu Dhabi is aiming to become a net gas exporter in the coming years, countering ever growing local demand.