UAE Oil Giant Sees Chemical Firm Covestro as Base for Growth

The largest oil producer in the United Arab Emirates (UAE), the Abu Dhabi National Oil Company (Adnoc), is on track to conclude its acquisition of Covestro AG, a leading German chemical manufacturer. This deal is valued at nearly $13 billion and is seen as a significant step for Adnoc's international expansion.

After successfully securing 91.3% of Covestro's shares as of December 16, 2024, Adnoc plans to maintain Covestro as an independent entity. Khaled Salmeen, the executive director for downstream and trading at Adnoc, emphasized that this acquisition represents a pivotal moment for the company, signaling their strategic aim for future growth.

Growth Strategy and Future Plans

Salmeen noted that Adnoc has a comprehensive growth strategy they intend to implement following the completion of the necessary regulatory approvals for the deal. The UAE is expanding its energy portfolio beyond traditional oil production, focusing on natural gas and chemicals as it anticipates a growing demand for these sectors in light of the global energy transition.

While current market conditions seem stable, Adnoc is positioning itself for various future energy supply trends. For instance, although gasoline consumption in China might plateau, Salmeen stated that demand for energy would continue to rise.

Setting Up New Business Unit

Moreover, Adnoc is in the process of establishing XRG PJSC, which will serve as its platform for expanding into international gas and chemical markets while also advancing low-carbon energy solutions, such as blue ammonia and biofuels. This new unit will hold Adnoc's stake in Covestro and is positioned to enhance its influence in the chemical sector further.

This acquisition of Covestro marks one of the largest deals of its kind in the Middle East involving a European company. Covestro plays a critical role in supplying materials for some of the world’s most recognizable brands in mobile and automotive manufacturing, making it an attractive asset for Adnoc's diversification strategy.

UAE, oil, acquisition