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(Recasts with ADNOC's aims for Murban to replace Brent)
By Rania El Gamal and Ron Bousso
ABU DHABI, Nov 12 (Reuters) - Abu Dhabi National Oil Co
(ADNOC) is aiming to have its Murban futures contract eventually
replace North Sea benchmark Brent whose volumes are declining,
an ADNOC executive said on Tuesday.
Intercontinental Exchange Inc plans to launch a new
exchange in the United Arab Emirates, ICE Futures Abu Dhabi
(IFAD), in the first half of 2020 to host ADNOC's flagship
Murban crude grade.
"We want to give the industry Murban as a replacement for
Brent crude futures," Philippe Khoury, head of trading at ADNOC
group, told an energy conference in the UAE capital Abu Dhabi.
"We still have to demonstrate that over time the community
can trust the crude as a benchmark," he added.
Oil majors BP, Total, Inpex, Vitol
, Shell, Petrochina, Korea's GS
Caltex, Japan's JXTG and Thailand's PTT have
agreed to become partners in the new exchange.
Vitol CEO Russel Hardy said it would take time to build
liquidity on the new exchange, and that Brent, a basket of
different crude qualities, and U.S. West Texas Intermediate
(WTI) were very established.
"There's a great deal of different constituents playing in
those markets ... these things will take time to build up on the
exchange here," he said at the same panel discussion.
"It is right to have that level of ambition but it will take
some time to build that level of liquidity," he said of ADNOC's
plans for Murban.
The new contract will create an alternative benchmark to the
most commonly used Middle East standard, the Dubai/Oman
benchmark operated by the Dubai Mercantile Exchange (DME) and
traded on CME's electronic platform.
Abu Dhabi's Supreme Petroleum Council last week approved the
launch of a new pricing mechanism for Murban crude as part of
ADNOC's broader transformation strategy. It authorised the state
energy firm to remove destination restrictions on Murban sales.
ADNOC plans to implement new Murban forward pricing between
the second quarter and third quarter of 2020.
UAE Energy Minister Suhail al-Mazrouei said earlier on
Tuesday that he saw no conflict between his country's compliance
with OPEC output cuts and plans to list Murban.
He said the UAE remained committed to cuts agreed by the
Organization of the Petroleum Exporting Countries, plus allies
led by Russia. These countries have since January implemented a
deal to cut output by 1.2 million barrels per day (bpd) which
lasts until March 2020, in an attempt to boost prices.
"I don't think there is a conflict in floating Murban with
the fact that UAE is going to comply with whatever we agree to
with OPEC ... I am not worried about that," Mazrouei told
reporters.
Murban light crude output is around 1.6-1.7 million barrels
per day. The UAE has traditionally sold oil directly to
end-users, mainly in Asia, based on retroactive pricing rather
than the forward pricing used by Saudi Arabia, Kuwait and Iraq.
The UAE, the third-largest OPEC producer behind Saudi Arabia
and Iraq, pumps around 3 million bpd, produced mostly by ADNOC.
(Reporting by Rania El Gamal, Ron Bousso, and Stanley Carvalho;
Writing by Lisa Barrington
Editing by Louise Heavens and David Evans)
