ExxonMobil, the world's biggest oil company, is vying to stay in Abu Dhabi after the emirate's main onshore concession expires in 2014.
Oil partners look to future
ExxonMobil hopes to see better incentives in any renewal of its concession to pump oil from Abu Dhabi, a senior executive says.
The world's largest oil company is one of five partners in Abu Dhabi's largest oil concession, which is due to expire in three years after a 75-year run.
The foreign partners - the others are BP, Royal Dutch Shell, Partex Oil and Gas holds and Total - receive US$1 a barrel for oil they produce from the concession, which covers about half of the emirate's 2.8 million barrels per day (bpd) capacity.
Foreign industry executives have privately expressed a desire for an increase in the $1 a barrel fee, which was set in the 1980s when oil prices and the cost of operating oilfields were about a quarter of current levels.
"Whatever mechanisms they want to use for a fiscal system - whether it's a certain number of dollars per barrel or a tax royalty regime - it needs to be within a framework that ensures there is a long-term predictability and alignment of all the stakeholders," said Morten Mauritzen, the president of ExxonMobil's UAE subsidiary.
In a good framework, he added, partners would be entitled to "incentives".
For ExxonMobil, maintaining or expanding its 9.5 per cent stake in the Abu Dhabi Company for Onshore Oil Operations (Adco), as the concession is called, is vital to maintaining its foothold in the Gulf.
The Texas-based oil giant also has its eye on more challenging gasfields, particularly after losing the $10 billion (Dh36.73bn) Shah sour gas project to Occidental, a smaller US rival, in January.
For Abu Dhabi, lining up the right partners is key to meeting a target to increase current production capacity of 2.8 million bpd to 3.5 million bpd in the next eight years, a move that would gain it extra sway in Opec and provide more revenue to build the economy.
To do so, the right technology will be needed, but under the Adco structure, foreign companies are reluctant to invest proprietary technology in fields where their co-operators are also their rivals.
One change floated by industry executives has been to give each operator exclusive control of one field within the concession, enabling it to deploy improved technology without concerns about its rivals.
Foreign oil executives are still gauging the effects of changes in the Supreme Petroleum Council (SPC), the government body that oversees oil and gas development.
Dr Jua'an Al Dhaheri, a director at Abu Dhabi Investment Authority, replaced Yousef Al Omeir as SPC secretary general, and Abdulla Nasser Al Suwaidi was promoted from deputy chief executive to director general of Abu Dhabi National Oil Company (Adnoc).
Giving to two people the roles that one man had held is regarded as adding a measure of independence between Adnoc and the SPC, whose mandate is to approve projects and steer development, much as a private company's board of directors would.
"We have for many, many years had a very good relationship with Adnoc and the SPC," said Mr Mauritzen.
"We'll just work hard to maintain that good relationship with the host government here and the national oil company." Another question is whether Abu Dhabi will seek new partners in its largest concessions. It has already opened its arms to South Korea, which has brought the emirate military training, healthcare expertise and plans for nuclear reactors.
Abu Dhabi this year promised South Korea the rights to develop one or more fields with total reserves of at least 1 billion barrels.
"It's really up to Abu Dhabi to really determine who they think would be the best ones to work with that can bring the value adds, that can bring technology and help Abu Dhabi in the best way to maximise the development of their oil and gas resources," Mr Mauritzen said. "Of course Abu Dhabi, they need to look broadly. They are probably looking at all options, which they should.
"But ultimately it's up to them to really make up their mind who they want to be their partners for the future."