The $125bn merger of Abu Dhabi’s International Petroleum Investment Company (Ipic) and Mubadala will be a “merger of equals”, creating synergies to optimise additional value to the economy, according to the UAE’s Energy Minister Suhail al Mazrouei.

The move to consolidate the refining, distribution and petrochemicals-focused Ipic with Mubadala, which handles manufacturing, was announced in late June to save costs.

“Mubadala and Ipic are not only oil and gas, they’re investment funds with lots of investment and they complement each other,” Al-Mazrouei said at a media roundtable.

“They are a merger of equals in size, but they are a little bit different in focus. There is an overlap of course, in oil and gas upstream.”

A joint committee will manage the merger and the two entities will operate independently until the committee completes its work.

Al-Mazrouei added that the move towards consolidation was not only to save costs, but also to create giant investment organisations, or “champions” as he referred to them.

“We’re trying to create companies that compete internationally and take a leading role,” he said. ”Already Ipic is the fifth-largest producer in petrochemicals and Mubadala is the fourth-largest producer of aluminium and semiconductors.

“The merger will create synergies between these companies to work together and additional value will be seen in the near future.

“There will be optimisation, etc, but the objective is to create champions.”

Ipic is working on $14bn of hydrocarbons storage, refining and petrochemicals projects in the UAE and wider Middle East. Progress on the schemes has been slow for the past year. They include the Fujairah refinery, the Duqm refinery in Oman, and Emirates LNG, in joint venture with Mubadala.

Mubadala manages a $67.1bn global portfolio in aerospace, hydrocarbons, metals and mining, defence, information technology, healthcare, real estate, infrastructure, and utilities. Its subsidiaries include Aldar Properties, Strata, Dunia Finance, Dolphin Energy, Mubadala Petroleum, Emirates Global Aluminium, Tabreed, and Abu Dhabi Future Energy Company (Masdar).