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ICE to launch Murban futures in March 2021 as ADNOC starts refined products trading in December

Highlights

Murban futures will be traded on a UAE exchange

Future were supposed to be launched in H1 2020

ADNOC plans refined products trading with Eni, OMV

Dubai — The Intercontinental Exchange said Nov. 9 it plans to launch Murban crude futures trading at an exchange in Abu Dhabi on March 29 of 2021, after it delayed the startup in the first-half of 2020 due to the COVID-19 pandemic.

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ICE "plans to launch ICE Futures Abu Dhabi (IFAD) and the world's first futures contracts based on Murban crude oil on March 29, 2021, subject to the completion of regulatory approvals,” it said in a statement.

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.

"ICE Murban Futures will be complemented with a range of cash settled derivatives," ICE said. "These include outright, differential and crack differentials against Brent, WTI, gasoil and naphtha among others, as well as inter-commodity spreads, which are planned to launch alongside Murban futures."

Flagship crude

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

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

ADNOC has taken a series of steps to help create a Murban futures contract.

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%).

Refined products trading

ADNOC plans to start trading refined products in December through its joint venture with Eni and OMW in a major marketing push, the company's CEO, Sultan al-Jaber told ADIPEC virtual conference Nov. 9.

"Next month, we will begin trading the full portfolio of our refined products,” al-Jaber said.

OMV holds 15%, Eni 20% and ADNOC the remainder in the trading joint venture, ADNOC Global Trading. In September, ADNOC Trading, a new unit, began derivatives trading with a focus on crude oil.

ADNOC joins a host of other Gulf producers that have launched trading units in recent years as they seek a slice of the lucrative market dominated before by oil trading firms and international oil companies

ADNOC awarded in 2019 stakes in ADNOC Refining to OMV and Eni, with the two companies paying a total of $5.8 billion as the national oil producer embarks on expanding its downstream portfolio. OMV took a 15% stake, Eni 20% and the remainder was retained by ADNOC.

The national oil producer has struck a number of deals to facilitate oil trading.

ADNOC, which has storage facilities in the UAE, Japan and India, acquired last year a 10% stake in storage terminal owner and operator VTTI, which will help expand its operations globally and in Fujairah.