Abu Dhabi has received strong interest from international firms for participating in its largest oilfields, the UAE oil minister said, as it weighs continuing previous partnerships with Western oil giants or letting big Asian buyers take stakes.
Abu Dhabi National Oil Company (ADNOC) took full control of the biggest oilfields in the United Arab Emirates (UAE) when its decades-old venture with four of the world’s largest oil companies ended on January 11.
Under the concession arrangement, ADNOC held a 60 per cent controlling stake in the Abu Dhabi Company for Onshore Oil Operations (ADCO) oilfields, while ExxonMobil, Royal Dutch Shell, Total and BP, each held 9.5 per cent stakes.
Several companies, including those whose participation in the concession have expired are interested in joining the project with revised terms, UAE’s oil minister Suhail bin Mohammed al-Mazroui told reporters.
“Most of the existing partners are involved and expressed keen interest to participate,” he said.
“There was a criteria that ADNOC announced. This was based on technology because the challenges moving forward are different than the challenges we had when we started,” the minister, who is in New Delhi to attend industry event Petrotech 2014, said.
Abu Dhabi is the capital of the UAE, which is a member of the Organization of Petroleum Exporting Countries (OPEC). UAE’s concession system allows oil and gas producers to acquire equity in hydrocarbon resources. ADCO’s output is about 1.6 million barrels per day (bpd).
The western oil majors have partnered Abu Dhabi since decades but several Asian energy companies are keen to take stakes in fields that mostly supply oil to the Asian market. These would offer a chance for UAE to strengthen political ties with its biggest oil buyers such as China, Korea and Japan.
The minister, however, said that western companies have agreed to continue working with ADNOC until new contracts are finalised.
“There is an arrangement between us and those companies to continue until we finalise the contract. Now, ADNOC is responsible for sale of all of the crude,” he said.
The Gulf nation has the capacity to produce three million barrels per day (bpd) and is currently producing 2.8 million bpd.
“Our production goes up and down depending on the market demand. Priority is market should be well supplied of the OPEC crude and UAE is doing its role in that context,” al-Mazroui said.
ADNOC aims to raise output from its largest onshore oilfields to 1.8 million barrels per day (bpd) in two years as the country aims for a 3.5 million bpd export capacity by 2017, he said.
ADNOC has a term contract to supply 230,000 bpd to Indian refiners but actual purchases go up to as high as 280,000 bpd as these companies also purchase from the spot market.
“As some members of OPEC like Libya and Iraq are experiencing difficulties, so we are producing as much as we can to ensure that markets are well-supplied,” he added.
The minister also said that the expansion of Ruwais refinery of Abu Dhabi Oil Refining Co (Takreer) will be completed by end-2014. The expansion was earlier planned to be completed in the first quarter of 2014.
The minister did not specify the reasons for the delay. The Ruwais refinery has a capacity of 415,000 bpd and expansion work is underway to more than double it. The new refinery would process Abu Dhabi’s Murban crude oil grade.