x Abu Dhabi, UAEFriday 28 July 2017

Austria's OMV wins rights for UAE oil and gas exploration

Oil 2014: OMV, the Austrian oil producer part-owned by the emirate, has secured rights to explore in eastern Abu Dhabi, making Austria the second country to enter the emirate's exploration scene since 1967.

The International Petroleum Investment Company holds a quarter stake in OMV. Heinz-Peter Bader / Reuters
The International Petroleum Investment Company holds a quarter stake in OMV. Heinz-Peter Bader / Reuters

OMV, the Austrian oil producer part-owned by Abu Dhabi, has won rights to explore for oil and gas east of the capital.

The contract, signed this week with Abu Dhabi National Oil Company (Adnoc), makes Austria only the second country to partner with the emirate in oil exploration since 1967, when a Japanese consortium won a bid for the offshore Mubarraz field.

Last year, South Korea's National Oil Corporation and GS Energy won rights to develop three blocks covering 10 per cent of Abu Dhabi's landmass.

With a tight playing field of contenders for both undeveloped fields and ageing deposits coming up for grabs during the next five years, the entry of a new partner shakes up a scene dominated for decades by the western supermajors. "It shows there's an increasing diversification in the upstream oil and gas sector," said Christopher Gunson, an oil and gas lawyer at Pillsbury. "It's a hopeful sign for new entrants like Maersk and Statoil."

The Danish and Norwegian players are among a fleet of first-timers seeking a foothold, of whom the biggest is China National Petroleum Corporation (CNPC).

Although OMV, unlike CNPC, does not bring access to an extensive demand base or strategic benefits in geopolitics, the Austrian company has long held a unique downstream relationship with the emirate.

The International Petroleum Investment Company, the Abu Dhabi sovereign wealth fund with a focus on refining and petrochemicals, holds a quarter stake in OMV. Both are joint venture partners in Borealis, the Austrian polymers producer, and Borealis and Adnoc, in turn, own Borouge, the emirate's biggest petrochemical maker.

"With this step, OMV is on the way to foster its upstream position in the Middle East," said Gerhard Roiss, the chief executive of OMV.

OMV did not disclose where it would drill in eastern Abu Dhabi, where it joins Occidental, which holds rights to two fields there, and the South Korean consortium, which has a block on the south-eastern border. A spokesman also declined to say how much it planned to invest during the four-year contract period.

Last year Adnoc recruited OMV and Germany's Wintershall to appraise the Shuwaihat sour gasfield near the western border.

Other exploration efforts are proceeding, with South Korea's National Oil planning to begin drilling in September or October this year.

In January the emirate's biggest onshore concession is scheduled to expire after a 75-year run. The Adnoc director general Abdulla Nasser Al Suwaidi has said he hopes to complete the tendering process by the end of the year.

 

ayee@thenational.ae