Total wins stake in Abu Dhabi’s biggest onshore oil fields
By Bloomberg
Total SA won bidding to develop the biggest onshore oil deposits in the United Arab Emirates, making the French energy company the first to be chosen by Abu Dhabi to pump more crude amid a global supply glut.
Abu Dhabi National Oil Co. awarded Total 10 percent of the main land-based concession in the U.A.E.’s largest sheikhdom, for 40 years starting Jan. 1, 2015, the Paris-based company said in an e-mailed statement on Thursday. Adnoc, as the government- owned producer is known, confirmed the award and said it will name other partners “soon.” Total’s stake would account for oil output generating $2.83 billion a year based on yesterday’s closing Brent price of $48.47 a barrel.
Middle Eastern energy suppliers including the U.A.E. are expanding their capacity to produce crude for export as well as to boost output of natural gas, which they burn as fuel in local power plants. The U.A.E., an OPEC member, holds about 6 percent of global oil reserves. Oil prices have dropped 55 percent in the past year amid a surplus of crude that the U.A.E. estimates at 2 million barrels a day.
Adnoc may award part of the concession to Asian producers, Robin Mills, an analyst at Dubai-based Manaar Energy Consulting, said by phone today. “That’s about securing political support and securing markets,” he said. “Adnoc’s biggest buyers are the ones in Asia.”
Total fell 1.5 percent in Paris trading to 44.88 euros.
15 Deposits
Most of the U.A.E.’s oil lies in Abu Dhabi, which plans to raise capacity to 3.5 million barrels a day in 2017 from about 3 million barrels a day now. The 15 deposits in the concession will produce 1.8 million barrels a day by 2017 from 1.6 million barrels today, Total said.
Royal Dutch Shell Plc and BP Plc are “front-runners” to join Total in the project with 10 percent each, International Oil Daily reported Thursday, citing three people it didn’t identify. Shell and BP declined to comment.
China National Petroleum Corp. together with either Japan’s Inpex Corp. or South Korea’s Korea National Oil Corp. may split the remaining 10 percent being offered, leaving Abu Dhabi with a majority 60 percent, IOD said.
Abu Dhabi is one of the few places in the Persian Gulf region where the largest U.S. and European producers still hold direct stakes in oil fields. Saudi Arabia and Kuwait, fellow members of the Organization of Petroleum Exporting Countries, don’t allow foreigners to own stakes in crude production.
Adnoc has been seeking for more than a year to line up new foreign partners to develop the emirate’s onshore deposits. Its previous joint venture with Total, BP, Shell, Exxon Mobil Corp. and Portugal’s Partex Oil & Gas expired in January 2014. Adnoc invited 11 companies to bid for the new concessions, it said in November 2013 as the renewal process began.
Other bidders were Norway’s Statoil ASA, Occidental Petroleum Corp. of the U.S., Russia’s OAO Rosneft and Eni SpA of Italy.