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The biggest oil company in the United Arab Emirates has secured a key European approval that brings it a step closer to completing a €12bn ($14bn) takeover of Covestro AG, part of a global deals push to create a natural gas and chemicals leader.Abu Dhabi National Oil Co won a conditional European Union go-ahead for the proposed buyout after addressing regulators’ concerns around state subsidies. The European Commission said on Friday that an offer from Adnoc to maintain Covestro’s intellectual property in Europe, as well as concessions around state guarantees, had settled earlier concerns, with the commitments valid for 10 years.The deal will be the largest takeover of a European firm by a Middle Eastern company and marks the region’s ambitions in employing its hydrocarbon wealth to build international networks. Adnoc and regional rival Saudi Aramco are snapping up liquefied natural gas supply contracts to feed growing trading arms.The Gulf countries are betting that demand for natural gas and chemicals will continue to grow as inputs for power and building blocks for consumer goods like the plastics, packaging and lightweight materials that go into mobile phones, computers and cars. Adnoc’s offer would be a cash injection into an industry that’s suffering falling prices and slack margins, hurting profit across the chemicals sector in Europe.The planned purchase of Covestro would give Adnoc control over a German company that supplies materials for some of the world’s most prominent phone and carmakers. Adnoc would own Covestro through its investment unit XRG, set up in last year as the company’s international platform for natural gas, chemicals and energy solutions.A year ago, Abu Dhabi launched the high-profile energy investment firm hoping to deploy billions of dollars on deals around the world. The company had early successes with gas deals in the US, Africa and central Asia. XRG’s biggest effort yet fell apart in September when the firm dropped its planned $19bn takeover of Australian natural gas producer Santos Ltd. It bounced back with a deal announced last week to explore buying into an LNG project in Argentina.In July, the commission, the EU’s antitrust arm, opened a full-scale investigation into the Covestro deal under tough new foreign subsidies rules. EU officials warned at the time that Adnoc’s state funding may have given it an unfair advantage over rivals with less-deep pockets, concerns that were allayed during negotiations between the parties.“Commitments offered by Adnoc effectively address the potential negative effects by allowing market participants to access key Covestro patents in the field of sustainability,” EU competition chief Teresa Ribera said in a statement. “Clear, pre-defined access to these patents will enable others to innovate and advance research in an area that is critical for Europe’s future.”Adnoc also transferred to XRG its holdings in four subsidiaries listed on the Abu Dhabi stock exchange in September. The transaction will bolster XRG’s balance sheet by providing it with cash flows from companies with total market capitalisation of nearly $120bn.

Abu Dhabi’s five-year-old oil trading arm plans to boost the volume it handles by two thirds in the next few years as it expands internationally, its CEO said.State-owned Abu Dhabi National Oil Co sees trading as a way to capture greater value from selling fuels produced in the emirate and elsewhere, said Ahmed bin Thalith, chief executive officer of the unit. The next phase of Adnoc Global Trading’s expansion will be an office in Houston in 2027, he said.“In only five years, we’ve established offices in Singapore, in Geneva and, soon to come, in the US,” bin Thalith said in an interview at the company’s office in Abu Dhabi. “This will put us on the global map and this will increase our footprint.” AGT is handling the equivalent of about 1.1mn to 1.2mn barrels of oil a day and aims to expand that to about 2mn barrels a day, he said.Middle Eastern oil producers have for decades dominated global crude markets, traditionally selling their cargoes on long-term contracts. More recently, companies like Adnoc and Saudi Aramco have been setting up and expanding trading operations as growing domestic refining capacity gave them access to higher-value products such as diesel that can be sold into new markets like Europe.Expanding to the US with a Houston office in 2027 will help achieve its volume targets, bin Thalith said. AGT has started a petrochemicals trading desk and will expand it as Adnoc builds its presence in that industry internationally and with plants on the US Gulf coast, he said.“Once you tap into a market such as the US where most of the products are exported, then that will give you a big boost,” he said.AGT is a joint venture between Adnoc, Italy’s Eni SpA and Austria’s OMV AG. Those partners also operate the emirate’s refinery at Ruwais on the Arabian Gulf coast, with capacity to process more than 900,000 barrels of crude a day. Some of the refinery’s gasoline, diesel and jet fuel is used domestically, but the majority goes for export.“We own the full value chain, from the well all the way to the distribution, and trading comes in and takes advantage of the whole operation,” bin Thalith said. “When you have one of the biggest refineries in the world behind you, that’s a very good thing to start with” and helped the trader be profitable “from day one,” he said.Adnoc and Saudi Aramco are both expanding their trading units in an effort to maximise profits and replicate the success of international firms such as Shell Plc and BP Plc. Another business called Adnoc Trading that’s wholly owned by the Middle Eastern producer, deals in crude oil and liquefied natural gas.International oil companies have long profited from selling on the open market crude from fields they operate and fuels from their own refining networks. That business, known as trading the system, gives the oil companies a base around which to buy and sell fuels produced by others, create hedges and react to market opportunities, a model the Middle Eastern producers are seeking to follow.“If you look at other companies that have those mega systems, they have a ratio of one system barrel to three non-system barrels,” bin Thalith said. “So we’d like to reach that point.” Regional rival Aramco Trading moved 7.3mn barrels a day of crude oil and refined products in 2024. Vitol Group the world’s largest independent trader, had a similar volume last year.Some traders have struggled make money this year due to price volatility caused by geopolitics rather than pure market fundamentals.“People confuse volatility with uncertainty and they’re not the same,” bin Thalith said. “Uncertainty is something like sanctions, like trade wars, that you don’t know when it’s going to end and it impacts you in a way that is different than the normal movement of the market.”