Abu Dhabi National Oil Company (ADNOC) signed a deal on Sunday to award to the China National Petroleum Corporation (CNPC) an 8-percent stake in Abu Dhabi’s onshore oil concession in exchange for a signing bonus of US$1.77 billion.
By striking the deal with ADNOC, the Chinese company joins oil majors BP and Total, each of whom has a 10-percent stake in the onshore concession operated by the Abu Dhabi Company for Onshore Petroleum Operations (ADCO). The other foreign shareholders in the venture are Japan’s Inpex Corporation with a 5 percent interest and South Korea’s GS Energy with a 3 percent stake.
ADNOC will continue to explore opportunities to attract partners for the remaining 4-percent interest of the 40-percent stake in the onshore concession it has slated to assign to foreign oil and gas firms, the Abu Dhabi company said in a statement.
The agreement with the Chinese firm is for a 40-year term backdated to January 1, 2015, ADNOC said. The other concession shareholders have also committed to a 40-year deal.
France’s Total joined the concession in January 2015. BP signed up for its stake in December last year. At the time of Total’s joining the concession, ADCO’s expected production for 2015 was around 1.6 million barrels of oil per day, with an objective to increase output to 1.8 million bpd from 2017.
ADCO produces around half of ADNOC’s 3.15-million-bpd output, which is now lower as the UAE is complying with the OPEC supply-cut deal. ADNOC plans to increase its output to 3.5 million barrels of oil per day by 2018, subject to the prevailing market conditions by that time.
As part of a new governmental push to spur investment in Abu Dhabi, oil majors looking to develop the emirate’s oil fields could be getting more profitable terms on their drilling contracts.