Adnoc seeks cost savings amid low oil prices

MEED    26 March 2020 (Last Updated March 26th, 2020 16:59)

Adnoc seeks cost savings amid low oil prices
With the Covid-19 pandemic spreading globally, oil prices have dropped to below $30 a barrel, impacting the commercial interests of energy producers such as Adnoc. Credit: Pavel Chagochkin / Shutterstock.

The Covid-19 pandemic has impacted the commercial interests of energy producers such as Abu Dhabi National Oil Company (Adnoc).

The company has issued a notification to its supply chain calling for discussions to achieve procurement cost reductions amid a period of plunging oil prices.

In the notification issued on 17 March, the company told its suppliers it is ‘proactively identifying opportunities for cost optimisation across the Adnoc Group’.

Adnoc said: “To that end, our procurement function will, in the coming days, reach out to you to begin a comprehensive review of your existing engagement with Adnoc with the goal of identifying cost savings.”

With the Covid-19 pandemic spreading globally, oil prices have dropped to below $30 a barrel, impacting the commercial interests of energy producers such as Adnoc.

Saudi Aramco has announced a reduced capital expenditure budget of $25bn to $30bn in 2020 among other coronavirus mitigation measures.

While Adnoc said that its ‘corporate strategy currently remains unchanged’, there is obvious pressure on the state enterprise to rein in its procurement costs.

In response to MEED’s request for comment on the notification, the company’s spokesperson said: “Adnoc is engaging with our partners and suppliers as we responsibly progress our projects. We are focused on driving performance, efficiency and value across our portfolio in response to market conditions.”

Separately, MEED has learnt from market sources that the company has adopted a work schedule to reduce staff density at its offices and facilities to achieve social distancing during the Covid-19 pandemic.

Employees across Adnoc Group have been divided into teams that will work on alternate days during the week.

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