President Huh Se-hong of GS Caltex, shakes hands with CEO Sultan Mahomed Al Jaber of ADNOC after signing an agreement setting up the ICE Abu Dhabi Futures Exchange in Abu Dhabi, UAE, recently.

GS Caltex will participate in the establishment of crude oil futures exchange with other global energy companies.

GS Caltex made an announcement on Nov. 12 that it has signed an agreement with eight energy companies, including ADNOC, a state-run oil company in Abu Dhabi, UAE, Intercontinental Exchange (ICE), the world's largest exchange group, and British Petroleum (BP), to set up the ICE Abu Dhabi Futures Exchange.

The exchange plans to start the UAE-produced Murban crude futures trading in the first half of next year. Murban crude oil, used by more than 60 oil refiners worldwide, accounted for 17 percent of the 271 million barrels of crude imported by GS Caltex last year.

It is the highest ratio for a single oil breed. GS Energy, the parent company of GS Caltex, has a 3 percent stake in the UAE's land production mine, which produces Murban crude, so that it can produce about 800 million barrels over 40 years.

“Under the regulation on the sulfur content of ships that will take effect in 2020, we will contribute to the active trading of Murban crude, a typical light crude oil that is expected to rise in demand, and increase transparency in trading prices,” a GS Caltex official said. “We hope it will also help stabilize oil prices in the future.”

Meanwhile, energy companies such as BP, Shell, Total, Vitol, Petrochina, INPEX, JXTG, and PTT, which participated in the establishment of the futures exchange, will also engage in the operation of the exchange, along with GS Caltex.

Abu Dhabi National Oil Company (ArDNOC) and nine of the world’s biggest energy traders - including BP, Shell, Total, and Vitol - are partnering to launch a crude oil futures exchange in Abu Dhabi, operator Intercontinental Exchange ICE said. The ICE Futures Abu Dhabi will host the world’s first Murban crude oil futures contracts.

Abu Dhabi’s Supreme Petroleum Council (SPC) has decided to list ADNOC’s Murban crude grade as a futures contract on an internationally recognized exchange, ADNOC said last week, adding that this would unlock “greater value for its customers, ADNOC and the UAE.”

The representatives of the 8 major oil companies that signed up to set up the ICE Abu Dhabi Futures Exchange in Abu Dhabi, UAE, are lined up for a photo session. (Photos: GS Caltex)

The Murban futures contract could be a successful crude oil benchmark as it has all the right characteristics, including high volumes and the potential for spot trading, analysts say.

The ten companies partnering with the new ICE-operated crude oil futures exchange are ADNOC, BP, GS Caltex, INPEX, JXTG, PetroChina, PTT, Shell, TOTSA (Total), and Vitol, the exchange operator said in a statement. ICE plans to launch ICE Futures Abu Dhabi and ICE Murban futures in the first half of 2020, subject to relevant regulatory approvals.

“Partnering with ADNOC and nine of the world’s largest physical traders of Murban crude to launch ICE Futures Abu Dhabi is a significant endorsement and strong signal of the potential for Murban to become a new global crude benchmark,” Jeffrey C. Sprecher, Chairman and CEO at Intercontinental Exchange, said.

ADNOC and Abu Dhabi hope the new Murban oil futures contract will one day become a region-wide benchmark.

“Having a new, independent exchange in Abu Dhabi will not only benefit the UAE, but also physical and financial oil traders around the world,” said Dr. Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO.

ADNOC’s Murban Crude - a light sweet crude - accounts for more than half of ADNOC’s daily oil production. ADNOC pumps some 1.7 million bpd of Murban crude out of its total production of around 3 million bpd.