Looking east from the Middle East
Abu Dhabi’s Crown Prince has driven much of the activity between the UAE and several Asian states in the past year. In doing so it recognises the increasingly dynamic relationship between the various emirates and the Asia as traditional energy trades evolve
The crown prince of Abu Dhabi, Sheikh Mohammed bin Zayed Al Nahyan, has made several visits to key Asian partners since the beginning of the year, signalling a ratcheting up of commercial ties
THE flurry of activity between the UAE and several Asian states in the past year is a result of both opportunity and need.
It however also hints at an increasingly dynamic relationship between the various emirates and the region as traditional energy trades also evolve.
Part of the impetus has come from the energetic efforts of Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed Al Nahyan, who has been busy with visits to key Asian partners since the beginning of this year.
In February, Sheikh Mohamed visited Singapore and South Korea where engineering firm SK E&C sealed a deal to build the world’s largest crude oil storage facility for Abu Dhabi National Oil Company in Fujairah in the UAE.
Adnoc also signed three framework agreements with South Korean energy companies Korea Gas Corporation, Korea National Oil Company and GS Energy, to explore upstream exploration and production opportunities, potential downstream investments and bunkering opportunities for both crude oil and liquefied natural gas.
The latest trip saw the Crown Prince making a landmark visit to China where he sealed broad-based deals with CNOOC and petrochemical company Wanhua Chemical Group.
The former agreement will see the two oil-related companies collaborating in the upstream and downstream oil and gas sector, especially with sour gas processing and treatment, as well as on LNG sales.
“This far-reaching framework agreement underpins the close economic ties between the UAE and China, and offers exciting new growth opportunities,” ADNOC group chief executive officer Sultan Ahmed Al Jaber was quoted as saying.
The partnership will also see the Chinese group’s offshore engineering arm COOEC being qualified as a contractor for engineering, procurement and construction opportunities, and another unit, China Oilfield Services coming on the list of Adnoc’s qualified oilfield services suppliers.
Downstream co-operation meanwhile will focus on collaboration on new integrated refining and petrochemical assets in China, as well as CNOOC’s existing refining assets.
Adnoc’s $12bn deal Wanhua Chemical Group meanwhile will see collaboration in the downstream sector focusing on producing downstream derivatives. This follows on from an agreement the two parties signed in November 2018 for a shipping joint venture based on a 10-year LPG supply contract signed in November 2018.
Adnoc Logistics & Services and Wanhua Chemical will establish a partnership for LPG transportation including the operation of two very large gas carriers.
UAE companies also signed a slew of oil and gas deals in Indonesia on the back of the Crown Prince’s visit. The first is a $2.5bn deal with Indonesian state-owned energy company Pertamina for oil and gas collaboration in both countries and globally.
In the petrochemical sector major Indonesian petchem company Chandra Asri Petrochemical signed an agreement with Abu Dhabi’s state fund Mubadala and Austrian energy firm OMV to explore opportunities in petrochemicals. This included exploring the development of a naphtha cracker and petrochemical complex potentially worth $6bn.
In the port sector DP World has signed deals with local conglomerate Maspion Group to develop a $1.2bn, 3m teu container terminal and industrial logistics park in Gresik in East Java.
The increased engagement is part of the emirates’ relatively recent “Look East” policy which has largely been driven by Sheikh Mohammed since about 2017. This comes from a recognition that its future is increasingly dependent on its ties with Asian nations as they continue to be the fastest growing economies in the world for the foreseeable future.
As such, it is prudent for the UAE to ensconce itself more closely within the economies of these nations. However, the closer relations also come with risks, as it often not always possible to segregate economic ties from political ones.
For example, closer relations with China may put it at odds with other partners within the region, such as South Korea and Indonesia who are increasingly uneasy at its expansionism.
However, being traders and experts in international relations since ancient times, the emiratis should hopefully deftly navigate their way around the brave new era of international trade.