Abu Dhabi National Oil Company (Adnoc) is progressing with the renewal of Abu Dhabi’s offshore oil concession, having already awarded three licences.
Two went to Asian players – an Indian consortium led by the overseas arm of state-owned Oil & Natural Gas Corporation (ONGC) Videsh – and a subsidiary of Japan’s Inpex, an existing stakeholder in the concession.
The third was awarded to Spain’s Cepsa, owned by Abu Dhabi’s Mubadala Investment Company.
Anticipation is growing in the market over which other players will win stakes in Abu Dhabi’s three oil blocks, with the remaining contracts for the concession expected to be awarded this month.
The three deals signed so far hint at the direction Adnoc plans to take.
“Don’t be surprised if you see Malaysia’s Petronas winning a stake,” a source tells MEED. “They have been in discussions [with Adnoc]. They are interested [in partnering with Adnoc Offshore].”
The Malaysian state oil firm had a regional presence in Iraq, although it departed from the Majnoon onshore oil concession along with joint stakeholder Shell in December last year, after the Iraqi Oil Ministry announced it would assume control of the asset.
Meanwhile, cooperation between Malaysia and regional oil giants has been growing, with Saudi Aramco and Adnoc taking steps to invest in the country’s downstream sector. Abu Dhabi’s Mubadala is even reported to be considering investing in a gas discovery in Malaysia.
“Petronas’ oil output is not enough [to meet Malaysia’s needs],” the source says. “They are looking to expand their reserves.”
State-owned China National Petroleum Company (CNPC), which already operates an 8 per cent stake in the Adnoc Onshore oil concession, and Korea National Oil Corporation (KNOC) of South Korea are also in the running to win stakes in the offshore concession, according to the source.
Cementing ties with Asia
Experts maintain that decisions regarding oil concession awards are guided by geopolitics. Considering the UAE’s focus on strengthening relationships with its Asian partners, it is likely that Abu Dhabi will offer state oil firms of these countries the chance to operate portions of its strategic asset.
Adnoc is “wanting to cement relationships with parties buying its oil,” says another source. “The intention is to widen the base.”
Adnoc kickstarted the long-awaited drive to renew licences for the offshore concession by awarding the first stake to a consortium of Indian companies led by the overseas arm of state upstream company ONGC Videsh. Considering that ONGC Videsh had never managed an oil asset in the Middle East previously, the licence awarded during Prime Minister Narendra Modi’s second official visit to the UAE on 11 February may have come as a surprise to many.
However, the second source says: “I wouldn’t say ONGC winning a stake was out of the blue. It is aligned to their [Adnoc’s] policy to engage with more Asian end-users. It doesn’t surprise me that India has got a share in the offshore concession.”
Adnoc has partitioned the offshore oil concession into three blocks for the renewal process as part of its Vision 2030 strategy to maximise value from its assets, and has retained the majority stake of 60 per cent in all three.
The concession containing Abu Dhabi’s key offshore fields, which prior to Adnoc’s integration process was managed by its former subsidiary Adma-Opco, has been divided into: Lower Zakum, as a single block; Umm Shaif and Nasr making up the second block; and Sateh al-Razboot (Sarb) and Umm Lulu forming the third block.
The status of the Adnoc Offshore concession as it stands today is as follows:
||Adnoc share||Partner share||Target production|
|Lower Zakum||60 per cent||10 per cent – ONGC Videsh-led consortium
10 per cent – Inpex
20 per cent – to be announced
|Umm Shaif and Nasr||60 per cent||40 per cent||460,000 b/d||500 million scfd|
|Sarb and Umm Lulu||60 per cent||20 per cent – Cepsa
20 per cent – to be announced
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