Text size:

  • Small
  • Normal
  • Large

Oil tender delay plan rejected

Abu Dhabi's Supreme Petroleum Council has rejected a proposal to extend the emirate's onshore concession by a year, allowing only a few months to evaluate bids before the existing contract expires.

Abu Dhabi's Supreme Petroleum Council (SPC) has rejected a proposal to extend the emirate's onshore concession by a year, allowing only a few months to evaluate bids before the existing contract expires.

Earlier this year Abu Dhabi National Oil Company (Adnoc) asked the SPC, the emirate's highest decision-making body for hydrocarbons policy, to extend the concession for one year to allow enough time for a complex tender process for giant fields that have caught the eye of companies such as Statoil and Korea National Oil Corporation.

But the SPC's decision to stick to the original expiration date of January 2014, as first reported by Dow Jones Newswires, means Adnoc will have to rush its evaluation of bids expected in the autumn or simply allow the concession to expire without a formal operator, which it has done in the past.

"It's a tight deadline," said Christopher Gunson, an oil and gas lawyer with Pillsbury in the UAE. "They want to put the pressure on all bidders, the new and the old."

The strategy may put particular pressure on the current operators invited to bid - ExxonMobil, Royal Dutch Shell, BP, Total - because they will not be able to count those reserves on their books once the concession expires, said one Abu Dhabi-based oil and gas executive. For some, as much as 10 per cent of global reserves are in the emirate.

A one-year extension may also be impractical, since existing shareholders would be unlikely to make substantial investments without knowing they will be able to make a return over the next 20 or 30 years.

In the meantime, Adnoc can independently operate the fields, which include Bab, Asab, Bu Hasa and Shah, said an executive from a bidding company.

Abu Dhabi let a gas processing project expire in 2008, only renewing it a year later on a backdated contract.

Adnoc sent out formal tender invitations, including geophysical data, to companies including the four biggest foreign shareholders and China National Petroleum Corporation, Korea National Oil Corporation, Japan's Inpex, Norway's Statoil and America's Occidental in March and expects bids by autumn. Last month Abdulla Nasser Al Suwaidi, the director general of Adnoc, said the company aimed to award the rights this year.

In relicensing the concession held by an elite club of western majors for 75 years, Abu Dhabi must balance strategic ties with the Asian countries which today consume most of the emirate's exports and historical relationships with western powers that offer help in other arenas such as defence.

 

ayee@thenational.ae

* With additional reporting by Florian Neuhof

Back to the top

More articles


Editor's Picks

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Miele coffee maker making Cappuccino at Miele Gallery in Sama Tower in Dubai. The cost of this coffee maker is around Dh 17,000. Pawan Singh / The National

Space-age coffee comes at a price from Miele

Miele have taken the coffee machine to a new level with its Dh17,000 offering that is built into your kitchen.

 The bridge of Seajacks Hydra, as the wind farm installation vessel undergoes finishing touches and testing works at Lamprell’s Hamriyah facility in Sharjah before its planned delivery on June 2, 2014. Jeffrey E Biteng / The National

In pictures: Building the Seajacks Hydra

The Seajacks Hydra, a wind farm installation vessel, is undergoing finishing touches and testing works at Lamprell’s Hamriyah facility in Sharjah before its planned delivery on June 2, 2014.

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 The rush of new supply of hotel rooms pushed Dubai occupancy rates down to 87 per cent. Sarah Dea / The National

Dubai hotel room rates rise 10 per cent

The rush of new supply pushed occupancy rates down to 87 per cent, a dip of 2.6 per cent from the previous year. Winter months are the strongest for Dubai hotels, with occupancy and prices falling to half their peaks by July.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.

Events

To add your event to The National listings, click here

Get the most from The National