ADNOC forms XRG with $80 billion, what industries are targeted by 'transformative' global investment?

According to Bloomberg, ADNOC, the largest oil producer in the UAE, will form an investment company XRG to focus on international natural gas, chemicals and low-carbon energy, which are key businesses for the company's global expansion.

According to a statement, ADNOC will launch this business in the first quarter of next year. The new company's enterprise value will exceed $80 billion, more than doubling the value of its assets in the next decade.

ADNOC did not disclose the top leadership of the new company, nor did it disclose the budget or funding details of the new business, but said it would hold a global strategic day event next year.

The independently operated investment company will initially focus on developing these three core strategic value platforms.

The new company's global chemicals division aims to become one of the world's top five chemical companies, producing and providing chemicals and specialty products essential to modern life to meet the requirements of a 70% increase in global demand expected by 2050.

The International Gas Platform will create a world-class integrated gas portfolio to help meet the expected 15% growth in global gas demand as a low-carbon transition fuel over the next decade, and the expected 65% growth in LNG demand by 2050.

Finally, XRG’s Low Carbon Energy division will invest in solutions needed to meet the growing demand for low-carbon energy and decarbonization technologies to drive economic growth through the energy transition. According to ADNOC, the low-carbon ammonia market alone is set to grow from near zero today to 70 million to 90 million tonnes per year by 2040.

“We are committed to creating long-term value for our stakeholders and strengthening Abu Dhabi and the UAE’s position as global energy and chemicals leaders,” said Sultan Ahmed Al Jaber, Managing Director and Group CEO of ADNOC.

The announcement of a global gas, chemicals and low-carbon energy company comes a month after ADNOC agreed to acquire German chemicals giant Covestro for $15.5 billion.

Oil producers such as the UAE and neighboring Saudi Arabia are looking to chemicals to expand the use of their oil and gas resources. These hydrocarbons can produce plastics, components for consumer goods such as mobile phones, computers and cars or lightweight parts such as batteries.

ADNOC and Saudi state oil company Aramco have both invested in liquefied natural gas plants and global chemical facilities. ADNOC already has a stake in LNG projects in the United States and Mozambique and has gas production rights in Egypt and Azerbaijan, while also eyeing more chemical deals.