Abu Dhabi National Oil Co (ADNOC) said on Tuesday it planned to consolidate the operations of two of its offshore oil companies into a new entity, as part of a bigger restructuring of the OPEC member’s main energy firm in the era of cheap oil.
The consolidation of Abu Dhabi Marine Operating Co (ADMA-OPCO) and Zakum Development Co (ZADCO) “aimed at capitalising on synergies to drive operational efficiency and maximise value,” ADNOC said in a statement.
“The new company resulting from this integration will be more agile, better able to respond to changing market demands, and be well positioned to take advantage of strategic opportunities for future growth.”
Current production for the ADMA-OPCO and ZADCO offshore oil fields is around 1.2 million barrels per day and ADNOC’s plan is to boost output potential to around 1.6 million bpd in 2017-18.
The United Arab Emirates currently produces about 3.2 million bpd.
The consolidation comes after ADNOC reshuffled its leadership in May, the first major shake-up since the appointment of Sultan Al Jaber as chief executive earlier this year.
The sharp drop in crude prices since mid-2014 has forced the oil industry to become more efficient amid tough competition.
“With ADNOC’s recent focus on driving efficiency, performance and profitability … the consolidation of ADMA-OPCO and ZADCO is a logical step,” said Al Jaber, who is also UAE Minister of State, in the statement.
A steering committee will be formed by ADNOC and its joint venture partners – BP, ExxonMobil, Japan Oil Development Company (JODCO) and Total – to oversee the integration.
Yaser al-Mazrouei, current chief executive of ADMA-OPCO, will be joint chief executive of ADMA-OPCO and ZADCO. The consolidation is expected to conclude by early 2018, ADNOC said.
“The existing concession rights of our partners in the concessions currently operated by ADMA-OPCO and ZADCO will not be affected by the consolidation,” Al Jaber said.
“ADNOC will continue to review and consider all options, and pursue partners for concessions expiring in 2018,” he added.
ADNOC has a 60 percent share in ADMA-OPCO, with the remainder owned by BP, JODCO, and Total. ADNOC has a 60 percent stake in ZADCO, while ExxonMobil and JODCO hold the rest.
“This timely integration will serve to streamline operations, lending to greater efficiency and benefits for all stakeholders involved,” said Hiroshi Fujii, President and CEO of JODCO, which is owned by Japan’s INPEX.
ADNOC had said it plans to invest over $25bn in the next five years on boosting oil output from offshore fields as part of the UAE’s plan to boost its oil output capacity to 3.5 million bpd by 2017-18.
ADMA-OPCO’s oil and gas production comes from two major fields, Umm Shaif and Lower Zakum. The company’s concession with its partners expires in 2018.
ZADCO was established in 1977 to develop and operate the Upper Zakum field, one of the world’s largest, with plans to boost its production capacity to 750,000 bpd by 2017-18. It also operates Umm Al Dalkh and Satah fields.