Insights - Commodity trading in the UAE
Category: Insights

Commodity trading in the UAE

With over 28 years’ experience in the oil and gas industry across the Middle East, Africa, Europe, South Asia, and China, Christian Tabet, Senior Advisor at Energex Partners, tells HC Insider about the market trends we are seeing in the Middle East and where he expects to see demand for talent. 

HC Insider: What was your career journey leading up to Energex Partners? 

Christian Tabet: I started my career at BP as a management trainee in 1990. Although, I was a Mechanical Engineering graduate, my boss provided me with a set of overalls and commanded me to learn from the ground up by working both in the field and inside the workshops. That education stayed with me for my entire career. Thereafter, I took on numerous other roles in operations where I led maintenance, engineering, and project management teams. At some point, I pivoted to the commercial side and took on a role as Regional Business Development Manager, then Area General Manager, which ultimately led me to a Regional Managing Director role. Being an Arabist, I was mostly based in the MENA region. I also had stints in the UK, Germany and Iberia and even looked after BP’s African aviation fuels business for a while. I left full time employment with BP in 2018 and started working with Energex Partners thereafter.   

HC Insider: What does your role at Energex Partners involve? 

CT: Energex is a commercial and strategic advisory firm focusing on the oil, gas, LNG, petrochemicals, and power sectors. I represent Energex in the Middle East region, which is a major oil, gas, and petrochemicals region and where the company has created distinguished relationships already.  Many players in this region are on their own journeys to build out trading capabilities and to become increasingly integrated along their supply chains. The team at Energex is made up entirely from seasoned industry professionals who have deep experience in building and growing supply and trading organisations, and I believe this gives Energex a bit of an edge because we have the experience to stand behind the advice we are giving, which is based upon practical experience. Furthermore, what happens in oil and gas over here affects the rest of the world in one way or another and we recognise that. It is therefore important for us to stay connected in this region, even though Covid-19 has made that a bit more challenging.   

HC Insider: What makes the UAE an attractive hub location and what have been the main drivers for growth in commodity trading in the region?  

CT: The UAE is a major producer, refiner and exporter and has tremendous aspirations to become an influential commodity trader to access a bigger share of the barrel. That is a fair aspiration when more than 50% of the world’s oil originates from this region. Furthermore, as the lowest cost producer, the UAE will remain relevant for a long time to come as flows from this region will be vital to both the East and West – and this will not change soon. As the rest of the world is moving away from traditional oil and gas, it is appropriate that the UAE takes charge in trading its – and others – molecules. However, to build an ecosystem, you need not just the NOC’s but also a strong private sector with large, medium, and small-sized traders and a robust, dynamic, and flexible financial system to energise that hub. Now, the region still must travel to Houston, London, Geneva, and Singapore for all that. 

HC Insider: What are some of the market trends we are seeing in the Middle East with regards to growth in sectors such as technology and renewables?  

CT: The commitment towards net zero carbon is being clearly articulated by several majors, especially BP and even major NOC’s such as ADNOC are fully on board. While this is a great aspiration to have, it will be difficult to achieve, and one needs to build a sizeable renewables portfolio because it will not be possible to achieve net zero with traditional oil and gas only. Technology is a critical enabler to not only reduce net carbon but also to drive cost efficiency as the sector will need to compete with lower cost alternatives. The digitisation of the oil well, therefore, presents a massive opportunity. There are impressive tech start-ups out there that are working very hard to scale up rapidly and they will become very important companies in the next few years. I recently attended a major oil and gas event and was staggered by how the conversation has changed compared to only a few years ago. The most memorable quote I was left with was that electricity is the energy of the 21st century whereas oil, gas, hydro, solar, wind and even hydrogen will all act as the feeders into the future electricity grid. That is a very different conversation to when oil and gas used to be in the heart and centre of everything.  

The UAE is a major producer and exporter and has tremendous aspirations to become an influential commodity trader to access a bigger share of the barrel.

HC Insider: What do you see the Middle East doing to become a leader in sustainability and reduce its reliance on oil and gas exports?  

CT: Every week there is a headline on new sustainability developments in the region. This is not aspirational, but it is a fact. The region has already achieved utility scale in solar and has had a major impact to drive down solar costs globally. This demonstrates how influential this region is becoming around sustainability. The region has other far-reaching ambitions for hydrogen which is a longer-term plan and to a lesser extent in wind. I am confident the region will also achieve leadership in these areas.   

HC Insider: How do you think investments in future fuels will impact growth in the region over the coming years?  

CT: That is a good question because the future will be very different to the past. We are talking about a scale that is unprecedented and in a timescale that is relatively short if we are to tackle climate change seriously. Therefore, the investment in future fuels will be more collaborative because no one can have a monopoly on either the technological aspect, the financing aspect or the deployment and distribution aspect. That is very exciting as it will create new commercial opportunities, new partnerships, and possibly new business models.   

HC Insider: Where do you expect to see demand for talent in the next few years?  

CT: The talent and capability areas are crucial for the delivery of these massive ambitions that the region has. Admittedly, the region is a late starter in terms of “trading” per se and is an emerging market in renewables and technology, whereas over the past few decades the region has become self-sufficient in terms of human talent with deep engineering, technical, operational and management capability. For example, in oil and gas, the region has mastered the skills for building and operating refineries, oil wells and pipelines to the highest standards in the world - whereas digitising those is quite a new skill set. At least in the near term the talent associated with the new digital world may need to be imported, but in parallel, new indigenous talent will also develop locally. I work with several brilliant Emirati and Saudi entrepreneurs that have deep expertise in AI and machine learning who have launched their very impressive technology start-ups.  

HC Insider: Do you think Abu Dhabi has the potential to be the next commodity trading hub?  

CT: Of course, Abu Dhabi has the vision, the natural resources, the infrastructure, the financial means, and it is already expertly executing its own ambitious strategy. With the recent announcement of the ADNOC Murban posting, there is every opportunity that Abu Dhabi will create a unique physical and paper trading opportunity in the region where even a place like Fujairah, with its well-developed oil storage infrastructure, could also be a major beneficiary. I am also aware that ADGM is actively building Abu Dhabi into a major global financial centre, and this is going to be an essential ingredient to the success of Abu Dhabi as a commodity hub. 

HC Insider: Do you foresee other NOCs following suit in building trading organisations similar to what we have seen ADNOC and Aramco do?  

CT: Yes, this is already happening across the board. However, the term ‘trading’ has different connotations to different people. To trade you need to be both a buyer and a seller. Some organisations are aiming to take a larger share of the margin on traded equity barrels by extending their marketing reach beyond the refinery gate and that is fine. Whereas other players are developing their infrastructure internationally and not limiting themselves to merely selling own crude or refined products but also taking physical and traded positions, so they are likely to become traders in the true sense. Each NOC ought to create its own strategy designed around its strengths, capabilities, and aspirations. That is truly exciting, and we at Energex believe we are uniquely placed as industry practitioners who have built and grown successful trading businesses to help those on that journey.