x Abu Dhabi, UAEThursday 18 January 2018

Abu Dhabi gives China encouragement on oil concession

Abu Dhabi's Supreme Petroleum Council is to evaluate the possibility of awarding China a concession after “very good” progress in talks, said the UAE Energy Minister.

China National Petroleum Corporation (CNPC) has evaluated a set of seven undeveloped blocks in the west of Abu Dhabi.
China National Petroleum Corporation (CNPC) has evaluated a set of seven undeveloped blocks in the west of Abu Dhabi.

SINGAPORE // The Supreme Petroleum Council, Abu Dhabi’s highest oil policy body, is to evaluate the possibility of awarding China a concession after “very good” progress in talks, said the UAE Minister of Energy.

China National Petroleum Corporation (CNPC) has evaluated a set of seven undeveloped blocks in the west of Abu Dhabi, its first tentative step towards accessing hydrocarbon reserves dominated for the greater part of the century by the western supermajors.

A concession, if awarded, would follow a strategic cooperation agreement signed by the Chinese state-owned giant and Abu Dhabi National Oil Company (Adnoc) last year.

“Adnoc is very happy with their Chinese partner,” Suhail Al Mazrouei, the Minister of Energy, said in Singapore at an energy summit. “They are keen on the exploration and doing the work in the ground to test their credibility on the ground, rather than just being a partner. We’re definitely keen on giving them that opportunity.”

The shift towards the East – not just with China but also South Korea as well as Japan, a long-time buyer – comes as Abu Dhabi’s oldest concession, a constellation of onshore fields operated by a joint venture with Royal Dutch Shell, Total, BP, ExxonMobil and Partex, comes to an end next year.

Adnoc received bids for that historic concession last week from a list of prequalified companies, which originally included the current partners excluding Partex, as well as Rosneft, Korea National Oil Corporation, CNPC and a handful of other newcomers.

Bidders have presented their plans for reaching a 70 per cent recovery rate – twice the industry norm – over a 40-year period, and for stakes of either 5 or 10 per cent, according to a person familiar with the tender.

Each of the four blocks into which the concession has been divided is to go to an “asset group leader”, a privileged company that will work closely with Adnoc on the field development programme and benefit from a tax credit based on the capital it invests.

The position of Occidental, previously regarded as one of the top competitors for the Abu Dhabi Company for Onshore Oil Operations (Adco) concession, has been less certain since the American company announced its plan to sell some of its Middle East assets.

It has stakes in the Dolphin Pipeline that transports Qatari gas to the UAE and Oman and the multibillion-dollar Shah sour gas project, as well as the rights to two oilfields onshore.

Occidental has not approached Abu Dhabi about divesting its assets, said Mr Al Mazrouei.

“For us, unless Oxy [Occidental] comes selling a concession, then that’s when they have to, by law, inform the Government,” he said. “We we not approached by Oxy about selling any assets.”

The minister was in Singapore for the signing of a memorandum of understanding for both countries to share knowledge and to encourage private-sector cooperation in energy efficiency, liquefied natural gas and other topics.

ayee@thenational.ae