The end of an era: 75 years later, Abu Dhabi to sell oil at premium prices
Abu Dhabi plans to sell crude from its main onshore oil fields to major oil companies at a premium after a 75-year production agreement ended Saturday, people familiar with the matter said.
State-run Abu Dhabi National Oil Co, known as Adnoc, said last week it wouldn’t renew its concession agreement with BP PLC, Exxon Mobil Corp, Royal Dutch Shell PLC, Total SA and Partex Oil & Gas to run the fields, which produce more than half the UAE’s crude output of 2.8 million barrels a day.
The former partners will pay a premium of 11 cents a barrel over Abu Dhabi’s official selling price for Murban grade crude under six-month contracts, two officials told The Wall Street Journal.The oil companies are allowed to freely market part of the previous 40 per cent crude output they owned in the concession instead of following Abu Dhabi’s tradition of selling crude to Asian customers through long-term contracts, the officials said.
Abu Dhabi Co for Onshore Oil Operations, or Adco, will operate the fields for Adnoc, which holds a 60 per cent controlling stake in the expired agreement.
The move comes as Abu Dhabi negotiates a new equity arrangement with foreign firms. The emirate is one of the few major oil-producing areas in the Arabian Gulf where international companies are still allowed to hold an equity interest.
The Adco concession covers six main deposits and is a crucial part of the UAE’s plan to increase its output capacity to 3.5 million barrels a day by 2017, from its current estimated maximum output capacity of around three million barrels a day.
All the foreign partners in the concession, excluding Partex, were invited to bid for a new agreement, according to Adnoc and company executives. Abu Dhabi has also green lighted US-based Occidental Petroleum Corp, China National Petroleum Corp, Inpex Corp of Japan, Korea National Oil Corp, Norwegian oil company Statoil ASA, Italy’s Eni and Russia’s OAO Rosneft to bid.
But the bidding process for a new consortium to run the Adco fields, which are capable of pumping around 1.5 million barrels of oil a day, has been slowed and complicated by confusion over whether the fields’ foreign partners would be allowed to keep their stakes in the new concession
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