This report was updated at 9.30 11/07/12
BP has reportedly been shut out of the tender process for the renewed licence at Abu Dhabi’s onshore oil fields run by ADCO.
According to Petroleum Intelligence Weekly (PIW), BP’s fellow supermajors ExxonMobil, Total and Shell, which also hold 9.5% stakes in the ADCO concession, have all been invited to tender but BP to date has not.
PIW reports that BP’s rejection occurred despite personal lobbying by British Prime Minister David Cameron to Sheikh Mohammad bin Zayed al-Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces.
The invite stage has no publicized deadline and BP may be invited at a later stage. “Constructive discussions are happening at all levels,” said a BP spokesman. But for now BP remain out of the running while its fellow partners have been approved.
Publicly, the British supermajor was hopeful of continuing its involvement in ADCO, and it BP’s position is the result of a snub, it will be something of a humiliation for CEO Bob Dudley. “Abu Dhabi and the emirates have been important to BP for 70 years,” Dudley said during a visit to Abu Dhabi for a trade mission in September 2011. “And we’d want to continue to cooperate with people, technology.”
“Everything is being revisited,” ADNOC Director General Abdulla Nasser Al Suwaidi said at the same time.
Sources at the ADCO partners have raised concerns about the level of technology sharing required under the current license structure, given the increased requirement for enhanced oil recovery techniques as the Bu Hasa, Bab and Asab oil fields age. Under current plans, which have fallen somewhat into abeyance in the last years of the license, the partners are to invest $60 billion across the ADCO fields.
Since the Gulf of Mexico disaster in 2010, BP has been reshaping its upstream operations around smaller, high margin plays including the Caspian Sea. The company is also selling out of the TNK-BP venture in Russia which accounts for around a quarter of group production.
However, Dudley’s prior statements and news of high-level lobbying suggest BP’s exit from the ADCO renewals is not deliberate, which means Dudley may come under further pressure from shareholders over the company’s underperformance relative to its fellow supermajors.
Last week senior Abu Dhabi oil officials confirmed that new companies had been invited to tender for ADCO’s more marginal fields, including Statoil and Maersk Oil. Unnamed Chinese and Korean companies may also be in the running.
Abu Dhabi parent oil company ADNOC has hired management consultants McKinsey to assist with preparing the tender process.
The current ADCO license, which began in 1939, is due to expire in 2014. ADCO is targeting a production hike from 1.4 million barrels a day to 1.8 million bpd, as part of Abu Dhabi’s national plan to raise production capacity to 3.5 million bpd.
