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The United Arab Emirates has no intention of changing its oil pricing methodology or resorting to hedging in order to defend its position in the key Asia-Pacific market, a senior official at the Abu Dhabi National Oil Company (ADNOC) says. However, the OPEC producer is selling significant volumes of crude without destination clauses and would consider increasing the amount of oil to be sold freely, once it completes an assessment of its new marketing strategy.
ADNOC normally sets its official selling prices (OSPs) each month retroactively and its sales contracts have traditionally contained destination clauses which severely restrict the potential for re-sales. Earlier this year, it started selling some of its Upper Zakum grade freely, allowing itself more flexibility amid geographic shifts in crude flows, particularly into the Asian market. Last year, ADNOC allocated some of its benchmark Murban crude oil to the four international oil companies (IOCs) that held stakes in the onshore concession after their leases expired at the start of 2013. Total, Shell, BP and ExxonMobil each had a 9.5% stake in the Abu Dhabi Company for Onshore Operations (ADCO) and are now waiting to hear whether they will win a new stake in a 40-year concession, a process that has been delayed, possibly till early next year. In the meantime, the marketing agreement with the IOCs, which expires in January, has been extended to the end of June 2015, Mubarak al-Ketbi, deputy director of the marketing and refining directorate at ADNOC, tells MEES. (CONTINUED - 2101 WORDS)
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