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* BP, Total, Shell among IFAD exchange partners
* IFAD to host ADNOC's flag Murban crude
* Murban futures to replace retroactive pricing
(Adds Thailand's PTT as one of the partners)
By Rania El Gamal and Maha El Dahan
ABU DHABI, Nov 11 (Reuters) - Intercontinental Exchange Inc
said on Monday that oil majors including BP, Total and
Shell would be partners in a new exchange it is launching in the
United Arab Emirates next year to list Abu Dhabi National Oil
Co's (ADNOC) flagship Murban crude grade.
The Murban futures contract, to be hosted on the new ICE
Futures Abu Dhabi (IFAD), would replace retroactive pricing,
allowing buyers to hedge risks and capture more value from
ADNOC's oil output, CEO Sultan al-Jaber told an energy forum in
the United Arab Emirates capital Abu Dhabi.
BP, Total, Inpex, Vitol
, Shell, Petrochina, Korea's GS
Caltex, Japan's JXTG and Thailand's PTT agreed
to become partners in the new exchange, ICE chairman and CEO
Jeffrey Sprecher told a news conference at the event.
ADNOC would also be a founder.
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.
Intercontinental Exchange said IFAD, established in the Abu
Dhabi Global Market, and clearing house ICE Clear Europe, are
working on regulatory approvals, with the aim of launching in
the first half of 2020.
"Murban futures will sit alongside the most significant
global oil benchmarks, providing the opportunity for the first
time for a much larger group of participants to trade and hedge
Murban in a regulated, transparent and accessible venue,"
Sprecher said in a statement published on Monday.
Long seen as one of the most conservative oil firms in the
Middle East, ADNOC has been overhauling its trading operations
to capture added value and adapt to market changes.
"It’s a revolution for ADNOC. Each of those partners on the
podium will put money into the new exchange and that would bring
in liquidity," a source familiar with the matter told Reuters.
ALTERNATIVE BENCHMARK
The new pricing system will allow ADNOC customers to know
what they are paying in advance, rather than waiting for about
two months to find out the price of oil they have already
received under the current retroactive pricing system.
"Murban accounts for 50 percent of UAE total crude oil
production and is globally recognised and acknowledged as a
special type of crude for its quality and reliability of
supply," Jaber told the news conference.
"Now of course given the significant flows of Murban into
Asia we believe the oil market is very ready for a more
geographically relevant market."
The Murban contract will also 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.
Oman's oil minister said the UAE initiative would be good
for the oil market and would not compete with the DME contract.
"I don't think so, it is a different type of crude, their
market is different. I don't see a direct impact," Mohammed bin
Hamad al-Rumhy told reporters at the energy forum in Abu Dhabi.
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 oil producer in the Organization
of the Petroleum Exporting Countries (OPEC) behind Saudi Arabia
and Iraq, pumps around 3 million bpd, produced mostly by ADNOC.
Jaber said the UAE was on track to expand production
capacity to 4 million bpd by the end of 2020.
(Additional reporting by Stanley Carvalho; Writing by Ghaida
Ghantous; editing by Louise Heavens, Jason Neely and Emelia
Sithole-Matarise)
