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Abu Dhabi fund seeks energy stakes after spending US$5b

[ABU DHABI ] Abu Dhabi's state fund is looking to expand its energy investments, with US$5 billion spent in the past few months in nations that can offer low costs such as the US, according to the head of Mubadala Investment Co's oil and chemicals projects.

"If you think about the low cost environment, the US ranks very high because of the feedstock," Musabbeh Al Kaabi, the chief executive officer overseeing Mubadala's petroleum and petrochemicals, said Monday in an interview in Abu Dhabi. "The natural gas is relatively attractive and the expansion in the petchem in the US is big." The current oil price is good for oil and gas investment, Al Kaabi said earlier in an interview on Bloomberg TV from Abu Dhabi where hundreds of energy executives are meeting at a conference. Oil demand is "exceeding our expectation," he said. In recent months, Mubadala has spent US$1.7 billion on a chemicals joint venture in the US with Borealis AG and Total SA, and another US$2.1 billion on chemicals in Louisiana. It's also expanding in Vietnam.

Brent crude, a global benchmark, has climbed the past five consecutive weeks, and is trading close to the highest in two years. The January contract traded at US$63.53 a barrel by 9.15 am in Dubai.

Mubadala manages about US$125 billion in assets after the merger this year of two state investment companies with holdings from aerospace to energy to infrastructure. The government-owned investment vehicle is reviewing its portfolio as a step toward the possible sale of some businesses or holdings, people familiar with the matter said earlier this month.

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The company is now producing about 500,000 barrels of crude a day, with major projects in Southeast Asia and North America, Al Kaabi said. "We believe in the energy landscape in the US," he said.

Mubadala Petroleum is looking to expand operations in Thailand, UAE Energy Minister Suhail Al Mazrouei said on Nov 2. The company also owns an enhanced oil recovery project in Oman, according to its website.

Abu Dhabi, capital of the United Arab Emirates, an OPEC state, holds about 6 percent of the world's proven oil reserves. Mubadala - the world's 14th-largest fund, according to the Sovereign Wealth Fund Institute - is part of Abu Dhabi's effort to turn oil revenue into profitable investments while also attracting technology and jobs. It completed a merger with Abu Dhabi's International Petroleum Investment Co earlier this year.

Al Kaabi is responsible for Mubadala's petroleum and petrochemicals businesses, including Mubadala Petroleum, owner of the Dolphin Gas pipeline. The pipeline is used to send natural gas from Qatar to the United Arab Emirates, which depends on imported gas to generate half its electricity. Qatar is the world's largest exporter of liquefied natural gas.