Chinese, Korean companies are in the running to partner with UAE NOC on expired onshore concessions
Industry sources have revealed that Adnoc’s oldest onshore concessions, which expired in January, are now likely to be at least partially tendered out to Asian IOCs.
Countries such as China and Korea are said to be in the running for the concessions under a 50/50 or 60/40 split with European and US IOCs.
According to Total’s UAE president Hatem Nuseibeh, before the concessions expired, Adnoc called for tenders from a wider range of IOCs than had previously been included. Adnoc also approached those oil companies that were already present in the fields, such as Total, BP, and Shell.
“I know, for example, that the people from Oxy were included in the call for tender for the Adnoc concessions. When we at Total went to give in our offer I saw that there were some Chinese and Korean companies also tendering, so I know they were involved in the offer,” Nuseibeh said.
The Asian concession contenders are likely to include the Korea National Oil Corporation, and China National Petroleum Company.
PricewaterhouseCoopers believes that the reason for the delay in announcing the new concessions is that Adnoc is not simply renegotiating the old contract with existing partners, but because it has opened the door to new entrants. Evidence suggests that those entrants are definitely the Asian oil companies.
Apportioning a percentage of those concessions to the Asian market would make sense for Adnoc, according to Paul Navratil, PwC Middle East Energy, Utilities, & Mining leader, PricewaterhouseCoopers, because Asia is one of the UAE’s biggest hydrocarbon demand markets.
“Conventional wisdom says that everyone is expecting that a door or two gets opened to Asian players, but then again that raises the question of whether that is predetermined. Adnoc may say they need to save X percent of the concessions for Asian companies for Z reasons. Mostly those reasons would be because Asia is the UAE’s demand market,” according to Navratil.
However, the entry of Asian players into the Adnoc concessions may irk European and US international oil companies, as they may not want to share knowledge and best practice with Asian competitors.
“IOCs are very hesitant to get into that type of deal where their intellectual property could be directly compromised,” said Navratil.
A partnership between Asian oil companies and Adnoc in the concessions would help further to strengthen relations between the United Arab Emirates and Asia.
“Two years ago, China and the UAE signed a strategic partnership agreement, so I think the UAE government would prefer to cooperate with the Chinese and other Asian companies in the future for marketing their oil resources, primarily because the Asian market is their main crude oil market, and has the fastest growing demand,” said Li Li, head of research and strategy (Refining/Oil/Gas) at China-based energy analyst firm ICIS C1 Energy.
