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Abu Dhabi to run onshore oilfields as foreign concessions expire

BY ANTHONY DIPAOLA

ABU DHABI (Bloomberg) -- Abu Dhabi’s 75 year oil extraction agreement is expiring, leaving the largest United States and European producers without direct stakes in the emirate’s onshore fields.

Once the arrangement expires, Abu Dhabi National Oil Co. will produce and sell all crude from the deposits, ending partnerships with BP, Royal Dutch Shell, Exxon Mobil and Total, the state-run Emirates News Agency reported.

The end of the accord in the United Arab Emirates, the Organization of Petroleum Exporting Countries’ fourth-largest supplier, further weakens the role of international companies in the group as producing nations seek to retain more of their oil wealth. Saudi Arabia and Kuwait, OPEC’s first and third biggest suppliers, are shut to foreign investment in crude extraction.

The companies are now focusing on securing new production deals in Abu Dhabi. International producers are among 11 bidders for new accords that would allow them to keep pumping oil in the Persian Gulf emirate. The bidding process may take until January 2015, Abdulla Nasser al-Suwaidi, director-general of the national oil company, known as Adnoc, said in November.

Abu Dhabi has pumped oil from its onshore fields under concession deals with Exxon, Shell, Total, BP and Partex Oil & Gas or their predecessors since January 1939. Adnoc became a partner in the 1970s, joining with the companies to form Abu Dhabi Co. for Onshore Oil Operations, or ADCO. That venture was responsible for extracting 1.5 MMbpd of Murban grade crude, the United Arab Emirates’ main blend.

The United Arab Emirates is “one of the last remaining countries where international oil companies can directly participate in the upstream sector,” Christopher Gunson, an Abu Dhabi-based energy lawyer at Pillsbury Winthrop Shaw Pittman, said by phone. Abu Dhabi’s “enormous reserves mean that it will produce and export crude until at least the end of this century.”

ADCO will continue to operate the fields on behalf of Adnoc without the international partners, Adnoc’s al-Suwaidi said at a ceremony marking the end of the concessions, according to the Emirates News Agency, or WAM.

Adnoc has held a 60% stake in ADCO, with the five foreign partners owning the remaining 40%. Partex wasn’t invited to bid for a new concession.

Representatives of the partner companies also attended the ceremony, WAM said. Other bidders for the new concessions are Korea National Oil Corporation, Japan Oil Development, China National Petroleum Corporation, Statoil, Occidental Petroleum Corporation of the United States, Rosneft and Eni, according to Energy Intelligence Group.

An Eni press officer confirmed that the company is bidding. Shell and BP declined to comment. Total couldn’t be reached.

01/09/2014

 

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