Iman Nasseri, managing director in the Middle East for FGE, talks to The Energy Year about how NOCs have evolved to become increasingly commercially minded entities and the UAE’s strong prospects for becoming a global trading hub. FGE is an oil and gas consultancy that provides independent research, analysis, forecasting and advisory services.
What role can a consultancy partner play in the oil and gas industry?
As analysts, our job is to examine market supply and demand and forecast the evolution of prices and other fundamental variables in the short, medium and long term, even 20-30 years down the road.
We have helped NOCs in the region form their visions and strategies by working with their corporate planning teams and guiding them through their investment plans and operational challenges in the upstream, downstream, and trading. Many of the refining projects that have come into existence since 2010 have benefitted from our insights. Over the past 10-15 years, we have also evaluated many refinery projects and decided that they were not good investments, and ultimately they didn’t happen. Looking back, we know our analysis was correct.
There are multiple managers across NOCs and ministries, and OPEC governors, who have engaged with FGE via training courses lasting from a few days up to six months, and we have given them all the tools that they needed to understand commercial and fundamental market analysis. All of these oil and gas market players – including private companies and government organisations – have engineers who do research and development and people who are engaged in operations and commercial practices. We have been working mainly with the commercial teams, who are always the ones who are closer to the leadership and drive growth.
What trends do you see emerging in the Middle East market?
A trend that we have witnessed over the past 15 years is that the NOCs have been moving towards developing their trading companies. The Omanis and Saudis were the first to launch trading companies, and then the UAE, Qatar, Kuwait and Bahrain followed. Until recently, we worked as a key adviser to the market research department at ADNOC headquarters as well as to the ADNOC Global Trading market research team, which is only a few years old. When we started working with them, the team had only a few people, and today it has around 100.
Another trend that has started but has yet to peak is how more traders are coming to the region. The Middle East is destined to become one of the world’s major trading hubs. It is already a hub, but pricing is still determined in Singapore, ARA [Amsterdam-Rotterdam-Antwerp] or Houston. Trading in the Middle East is still mostly based on Singapore prices.
We expect this trend will continue in the near future because the NOCs are moving towards more commercial trading operations and away from traditional term contracts and bilateral contracts with other governments. Also, more small and large traders are coming into the region. Not only physical traders but also financial traders.
The UAE has a production capacity of more than 4 million bopd and it is growing, which means more supply, more products and more supply destinations, but also more financial means. Banks, hedge funds, risk managers, storage and infrastructure companies – all of these entities are developing, and we’re moving towards a near future where the Middle East will become the world’s fourth trading hub.
How has ADNOC adapted to these trends?
Under the leadership of Dr. Sultan Ahmed Al Jaber, ADNOC has transformed from a traditional NOC into a leading international oil company. In the market, we have always had a split between IOCs and NOCs. National companies were government-owned, which ADNOC still is, and they were known for being less dynamic and less commercially driven entities. Dr. Al Jaber has converted the UAE’s NOC into an entity that is operating as an IOC. We continue to advise ADNOC’s market research and trading entities during this evolution.
What changes have you seen over the years in the clientele that seeks your services?
Over the more than 35 years that we have been physically present as FGE in this region, we have been a partner, a consultant, and in many cases an exclusive adviser to nearly all the NOCs. We have had decades-long partnerships with Aramco in Saudi Arabia, ADNOC and ENOC in the UAE, OQ and Oman LNG in Oman, Qatar Energy in Qatar, and virtually all the K-companies in Kuwait. We have been working with all of them for decades as a key adviser to their market research.
The NOCs were our historical clients for more than 30 years, but we have also catered our intelligence to oil majors such as Chevron, BP, Shell and major trading houses such as Vitol, Gunvor, Trafigura and Mercuria, as well as to the new trading companies that are moving to the UAE. We supply a diverse customer base with richer products and insights.
Some of our clients work with multiple consultants or use them for different reasons. Some of our competitors are more active in non-conventional energy sources, renewable sources or engineering. But when it comes to oil and gas market analysis and market research, we are still a key partner for the NOCs.
Furthermore, we are currently the go-to resource for any reliable data on Iraq and Iran, which are areas devoid of information or with substantial gaps, even though they are top producers and exporters. Within the lack of transparency and the rise in misinformation caused by sanctions, war and leadership problems, our market share has grown because we provide players with actionable insight and visibility into opaque markets