ICE plans to launch trading in Murban futures in Q1 2021

Dubai — The Intercontinental Exchange said Oct. 12 it plans to launch Murban crude futures trading at an exchange in Abu Dhabi in the first quarter of 2021, after it delayed the startup in the first half of 2020 due to the COVID-19 pandemic.

"Subject to the completion of regulatory approvals, ICE plans to launch IFAD (ICE Futures Abu Dhabi) and trading in Murban futures contracts late in the first quarter of 2021,” ICE said. "A more specific date for the launch of trading will be announced in due course.”

ICE and Abu Dhabi National Oil Co., the UAE's biggest energy producer, first announced plans to start a derivatives trading platform in November 2019, to be hosted on the new IFAD exchange, in partnership with nine international energy companies.

ADNOC and ICE are partnering with BP, GS Caltex, Inpex, JXTG, PetroChina, PTT, Shell, Total and Vitol to launch IFAD. The breakdown of shareholding has not been disclosed.

FLAGSHIP CRUDE

Murban is ADNOC's flagship crude, one of four it sells. The three others are Upper Zakum, Das and Umm Lulu.

The launch of Murban complements ADNOC's marketing push, with the start-up of its crude derivatives trading in September through a new unit and another trading joint venture alongside OMV and Eni that is due to start in the coming months.

ADNOC Trading is focusing on crude oil, while ADNOC Global Trading, its trading JV, will focus on refined products, ADNOC said in a statement Sept. 30. OMV holds 15% of the trading JV, Eni 20% and ADNOC the remainder. In 2019, OMV also took a 15% stake and Eni 20% interest in ADNOC Refining, with the remainder retained by ADNOC.

CONTRACT TERMS

In relation to each vessel the terminal operator imposes a minimum loading requirement, which may be amended, of 200,000 barrels, or 200 lots, for deliveries at the terminal of Murban crude oil resulting from the Murban contract, according to the contract terms posted on ICE.

Delivery of the crude should take place before last three days of the month, it said.

"Delivery shall commence within the three day delivery range (as confirmed and/or shortened to a two day delivery range by the terminal), which shall fall within the 'delivery period,' being no earlier than the first terminal loading day of the delivery month and no later than the third terminal loading day prior to the end of the said delivery month," it said.

ADNOC OSPs

Presently, it issues OSPs as differentials against Platts front-month Dubai crude assessments, a practice it first began in March this year.

Murban, produced onshore in Abu Dhabi, has a total production of approximately 1.7 million b/d, most of which is exported, largely to Asia, with Abu Dhabi retaining the balance for domestic refining. The crude, with a gravity of 40.5 API and sulfur content of 0.78%, is considered light sour by Asian refiners.

Murban will be the second physically delivered futures contracts traded on a regional exchange after Dubai Mercantile Exchange's Oman crude futures.

Murban is also a deliverable grade in the Platts benchmark Dubai and Oman crude assessments.

ADNOC'S PARTNERS

It is investing $3.1 billion in a project to allow its Ruwais oil refinery, which has a capacity exceeding 800,000 b/d, to process crudes other than Murban to free it up for export.

It is also building the world's biggest underground oil storage facility in Fujairah to hold 42 million barrels of crude, including Murban.

Some of the nine oil companies with stakes in IFAD are already partners with ADNOC.

BP (10%), Total (10%), INPEX of Japan (5%) and GS Caltex of Korea (3%) are equity shareholders in ADNOC Onshore, which produces the Murban grade with ADNOC retaining a 60% stake in the concession. The other ADNOC Onshore partners are CNPC (8%) and ZhenHua Oil (4%).

Oil trading house Vitol in 2019 sold a 10% stake in its oil storage arm VTTI, which has facilities in Fujairah, to ADNOC.

(Updates with background)