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Abu Dhabi, UAEFriday 14 December 2018

Adnoc strikes new framework agreement with China National Petroleum Corporation

Chinese firm will consider options for offshore and sour gas projects among others

CNPC entities such as PetroChina have exposure to the US financial markets, making them susceptible to penalties in case of sanctions non-compliance. Reuters
CNPC entities such as PetroChina have exposure to the US financial markets, making them susceptible to penalties in case of sanctions non-compliance. Reuters

The Abu Dhabi National Oil Company (Adnoc) and China National Petroleum Corporation (CNPC) will look at offshore ventures and sour gas projects, following the signing of a new framework agreement on Wednesday at the Abu Dhabi International Petroleum Exhibition and Conference (Adipec).

The Chinese state-owned energy firm is set to consider possible opportunities in developing Abu Dhabi’s Lower Zakum, Umm Shaif and Nasr offshore concessions, the Bab Bu Hasa, Ghasha and Hail sour gas development projects as well as others.

“In support of our 2030 smart growth strategy we are focused on creating the greatest value from our partnerships to capitalise on our oil and gas reserves and maximise the returns from our offshore assets,” said UAE state minister and Adnoc group chief executive Dr Sultan Al Jaber.

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“We are keen to work with partners who can share technology and capital, enable market access. Equally, we want partners who can deploy world-class engineering solutions for our mutual benefit, ultimately enabling us to drive a more profitable upstream business and strong returns to Abu Dhabi and the wider UAE,” he said in a statement.

Adnoc signed an agreement on Tuesday with CNPC-affiliate China Petroleum Engineering and Construction Corporation to expand production capacity at the onshore Bab field to 450,000 barrels a day (b/d) from present capacity of 420,000 b/d.

The agreement follows an increasing pivot to Asia by Adnoc, as it looks to engage operators from Japan and China in developing some of its onshore and offshore concessions, as well as mid- and downstream projects as part of its expanded partnership model.

Adnoc also signed an agreement on Tuesday to significantly increase production capacity at its offshore Upper Zakum field to a million b/d by 2024 with existing partners Japan’s Inpex Corporation and Exxon Mobil’s Abu Dhabi subsidiary.

The agreement with CNPC follows what has been a successful year for China’s largest oil and gas producer and supplier, which took an eight per cent stake in February in Adnoc Onshore, which operates onshore concessions in the emirate. The agreement backdated to 1 January 2015 will be for a period of 40 years.

Following China Energy’s four per cent stake in the Adnoc subsidiary, Chinese interests account for the largest foreign holdings in the concession, which also includes France’s Total, BP, Inpex and South Korea’s GS Energy with Adnoc the major shareholder.