Abu Dhabi open to new upstream partners

04 July 2012

Adnoc officials say Korean and Chinese groups could figure in future concessions

The UAE is open to allowing new partners to take shares in its oil and gas concessions as it pushes to increase capacity from its fields, according to Abu Dhabi National Oil Company (Adnoc) officials.

Adnoc, which exports most of its crude to Asia, has only partnered with Western and Japanese companies on major oil concessions in the past, but is becoming more open to possible South Korean and Chinese partnerships in future developments.

“The trend is to be more open to international partnership. In the tenders for marginal fields or small fields… there is consideration to have newcomers,” said Ali al-Jarwan chief executive officer (CEO) of Adnoc’s offshore subsidiary Abu Dhabi Marine Operating Company (Adma-Opco).

In March this year, a consortium led by Korea National Oil Corporation (KNOC) completed a deal to take a 40 per cent stake in two onshore and one offshore exploration areas in Abu Dhabi, while Adnoc has signed a memorandum of understanding (MOU) with China on potential exploration.

The concession for Abu Dhabi Company for Onshore Operations (Adco) fields expires in 2014, leading to speculation about future shareholders in Adnoc’s onshore group, which pumps almost 60 per cent of the UAE’s crude.

Adco is 60-per-cent-owned by Adnoc, with ExxonMobil, Shell, Total, BP and Portugal’s Partex holding the remaining shares. Adnoc is currently prequalifying bidders for the post-2014 concessions.

Senior Adnoc officials, who spoke at a press conference in Abu Dhabi on 3 July, said the Western international oil companies (IOCs) would continue to play a major role in new concessions in the UAE oil and gas industry.

“The most probable scenario is continuation of the IOCs’ partnership with Adnoc, with a minimum 60 per cent Adnoc holding and either one or more partner being from the West, or as we have seen recently, Korean or Chinese,” said Mohammed Sahoo al-Suwaidi, CEO of Adnoc’s main gas business Abu Dhabi Gas Industries (Gasco).

“The announcements of two recent agreements with Korean and Chinese companies are MOUs designed to look at more exploration opportunities, but are not concrete in terms of a joint ventures,” he added.

The Adma-Opco concession, which produces 550,000 barrels a day (b/d) of the UAE’s estimated 2.6 million b/d total, expires in 2018. Gasco’s concession was renewed in a 20-year contract in April 2009 with the same partners – Shell, Total and Partex – although the terms and conditions have changed, Al-Suwaidi said.

“There are no fixed rules… the decision makers will look at it case by case,” he added.

Al-Jarwan also told reporters that the Abu Dhabi Crude Oil Pipeline (Adcop), linking the Habshan processing hub with the UAE’s eastern port of Fujairah, would be commissioned by the end of July.

Al-Suwaidi highlighted that natural gas developments dominated the current investments of Adnoc and its subsidiaries, bucking the trend of focusing on oil.

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