Energy security, AI and supply deals take centre stage as Adipec wraps up

Energy security jeopardised by supply disruption throughout the Iran war and the growing use of AI by oil companies to improve productivity were among the key themes at Adipec, which concluded on Thursday.

Thousands of companies took part in the four-day event, with large participation from Asia.

Senior oil executives and energy ministers highlighted supply challenges impacting the market as the Strait of Hormuz, a vital conduit for global oil trade, remains officially shut as the Middle East war, now in its ninth month, drags on.

In his opening speech on Monday, Dr Sultan Al Jaber, Minister of Industry and Advanced Technology, and managing director and group chief executive of Adnoc, said Hormuz disruption has drained nearly one billion barrels from global oil inventories, with stocks of diesel falling to their lowest seasonal level in 35 years in some markets.

Liquefied natural gas supply gap has jumped to 600 billion cubic feet.

“Simply put, the world has eroded its supply buffers,” said Dr Al Jaber.

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'Energy security is not about supply but the ability to deliver'

Delivery costs have also gone up amid logistical challenges and disruption to ship activity.

“Before the disruption, logistics were less than 5 per cent of the cost of a barrel. Today, they are more than 30 per cent,” Dr Al Jaber said.

Only fewer ships are sailing through the Strait of Hormuz compared to more than 100 daily before the conflict broke out in late February, causing oil prices to surge and global inflation to rise. Risk of crossing the channel is high as Iran continues to attack ships, with two tankers and a ship on fire the result of the latest attacks by Islamic Revolutionary Guard Corps.

Dr Al Jaber also emphasised the importance of building new infrastructure to supply crude to global markets and continuation of capital flows to finance trade movement.

The UAE, which exited Opec earlier this year, is investing heavily to boost its energy infrastructure. It announced building of a new pipeline to connect Abu Dhabi with Fujairah on the east coast to bypass the Hormuz and provide supplies to global markets.

Adnoc and OpenAI

Adnoc also signed a new agreement with OpenAI and Abu Dhabi’s G42, to become the first energy company to deploy OpenAI’s Frontier technology as it seeks to expand AI use across its operations.

The project will integrate advanced AI capabilities across Adnoc’s operations, enabling more connected operational, investment and commercial decision-making to improve efficiency and productivity.

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Sam Altman: Adnoc’s AI adoption could deliver huge results

OpenAI chief executive Sam Altman said there “should not be a handoff to AI” and that the technology “needs to be a tool built for people and needs to serve people, not the other way around”.

Suhail Al Mazrouei, Minister of Energy and Infrastructure, told delegates that the UAE did not stop its oil exports despite the war and “at a certain time” it was faring better than before the conflict, with the help of pipelines and ships.

“Sometimes, even we have filled in the gap … we managed to oversupply to those countries because there was a significant reduction from many countries,” Mr Al Mazrouei said.

India is among the biggest beneficiaries of continued supply from the Emirates, with the Asian nation receiving 15 per cent of its total imports during the conflict, a top official from India’s Ministry of Petroleum and Natural Gas told The National.

Energy ministers from Venezuela, an Opec member, Egypt, Romania and Azerbaijan were among the top officials to take part in the energy event.

Chief executives of oil companies, including Meg O’ Neill of BP, Richard Jackson of Oxy and Emma Delane of OMV, also took part in panel discussions.

Energy deals

New energy deals were announced coinciding with the event, including Adnoc Gas agreement with France’s TotalEnergies to supply up to 1.6 million tonnes of LNG and XRG, the international energy investment unit of Adnoc's $1.5 billion deal with Shell to buy stake in Shell's Australian natural gas project.

Abu Dhabi's Ta'ziz also announced the closing of $1.39 billion financing for two projects in Ruwais to support the UAE’s industrial development strategy.