Abu Dhabi Continues Onshore Oil Fields Uncertainty

Abu Dhabi wants to extend by a year the concession for its main onshore oil fields, keeping its options wide open. These include breaking it up into individual fields; reducing consortium members’ equity; and adding new shareholders. Shareholders of Abu Dhabi Company for Onshore Oil Operations (ADCO) are entering their fifth year of uncertainty, which looks set to continue into a sixth, adding to the confusion over the concession renewal, and further delaying a planned boost in production capacity.

State-owned Abu Dhabi National Oil Company (ADNOC) is asking the Supreme Petroleum Council (SPC) to extend ADCO’s concession a year beyond its expiration date of 13 January 2013. ADCO is owned by ADNOC 60%; Portugal’s Partex 2%; BP 9.5%; Total 9.5%; Shell 9.5%; and ExxonMobil 9.5%. By June 2012, those international oil company (IOC) partners in ADCO, which want the concession to continue unchanged, were gaining confidence that newcomers would only be given peripheral fields. The concession only had 18 months left – a time they thought was too short for radical changes, such as breaking up the concession to let individual firms run separate fields. Some of the IOCs had started to think that their stakes would be renewed by default, which is what happened in 2009 with the Abu Dhabi Gas Industries (GASCO) – ADNOC 68%; Shell 15%; Total 15%; and Partex 2% – concession to run onshore gas fields and gas processing plants. But then ADNOC dropped a bombshell: BP and Partex were not invited to prequalify to bid for whatever Abu Dhabi will offer of the concession, but challengers, including US firms Chevron, Occidental Petroleum (Oxy), Japan’s Inpex, Norway’s Statoil, Korea’s KNOC, and China’s CNPC and reportedly Russia’s Rosneft were. BP, but not Partex, has since been invited. ADNOC’s request, if granted, would give Abu Dhabi almost two years to revisit all ideas, technologies, field plans, and proposals on offer. (CONTINUED - 2121 WORDS)