#ADNOC INSIGHTS: In conversation with Russell Hardy

So first let me say, we're very, very excited about the investment that Adnoc is making in VTTI, joining us in that partnership. We've long been an owner of VTTI and grown that business over the last ten years as a daughter company of Vitol. It's very, very exciting to have Adnoc as part of that partnership, and I think it's going to help us grow that business and propel it for the next decade. The markets are evolving, and emerging markets are becoming more and more important both to this region and to global oil growth. I think having Adnoc as a partner in VTTI is going to help both sides to exploit those opportunities.

So I think the more integrated you are, the more diversified your income is, the less exposed you are to volatility. Storage is a great asset for diversifying that exposure to oil prices. Clearly when oil prices are low, storage tends to be more valuable, and when oil prices are high, storage tends to be a little less valuable. So it's a good diversifier in that sense. But overall, it's less about the oil price movements themselves and much more about developing a route to market and developing that next stage into the downstream.

Geopolitical noise... I think the main thing that people are concerned about at the moment is global growth, and beneath that, the relationship between the US and China and its approach to trade tariffs. Whether that problem can be solved, it's been ongoing now for about 18 months and it's causing quite a lot of ripples in terms of global growth. So I think that's the main thing that people are concerned about. But looking beyond that, yes, there's certainly in Europe a desire to diversify away from traditional energy types and to move into new energies. But the developing world still needs a lot of energy. There are a lot of people that today don't have motorized transport, and so there's a lot of growth opportunities still in those markets where energy consumption is just beginning its journey from fairly low levels.

We invested, I think it was 2007, in the Fujairah terminal and we bought it from the government. We rapidly expanded the terminal. I think it was about 400, 450 thousand cubic meters, and I think we're now at about 1.6 million cubic meters. So we've grown that footprint in quite a big way. The market has developed in the Middle East over that period of time. We've had growth in all of the regional countries. There's been a lot of refinery expansions which has brought trade to Fujairah, and now Fujairah is very much becoming a center for benchmarks on products at the moment. They have published stock data. Most traders want to be in Fujairah, and I think it's a natural evolution for Adnoc as they develop their trading business that they take some positions in Fujairah, and hopefully VTTI can help build a platform for them to achieve those goals.

Crude oil and petroleum products are going to continue to play a big part. We see growth out to 2030, certainly, it may go a little bit beyond that. It's obviously a function of how quickly electric vehicles and suchlike come into the marketplace. But we see those growth opportunities out to 2030. Of course, they're going to be different regionally because Europe is less likely to take a share of that growth and more likely to decline over that period. But as I said before, there's quite a lot of emerging market demand to come. We've entered a few countries where we see those growth opportunities, like Pakistan, Brazil, Turkey, and across Africa. We do see a very positive outlook for oil demand, a very positive outlook for Vitol. But at the same time, we have to be conscious that things are going to change over the next 10 to 15 years, that we have to build our presence in other alternative energies. We've long been a gas player and we have a big gas business in Europe, a gas business in the States, and an international LNG business which has grown a lot over the last three years. The international LNG market is going to possibly double over the next ten years, so it's a fantastic place to put some resources and to develop our presence. We have a few renewable projects, fairly modest, and for us we're trying to find a path that gives us a credible future in those areas. Because certainly it's important for us to have that diversification, because the oil products markets are probably going to be finite. Growth won't last forever, although I'm not pessimistic about growth just this second. But looking to your question, twenty years ahead, then we need to be there.

Thank you very much, very nice to be here.