CNPC gets 8% Adco stake for Dh6.5b

Dr Sultan bin Ahmed Al Jaber and Wang Yilin during the signing ceremony in Abu Dhabi.

Abu Dhabi National Oil Company (Adnoc) on Sunday said it awarded a stake in its largest oil concession to China National Petroleum Corporation (CNPC) as the UAE brings in more foreign investors to raise crude production capacity.
In a statement, the company said it had signed an agreement giving CNPC an eight per cent stake in a 40-year onshore oil concession. The onshore concession is operated by the Abu Dhabi Company for Onshore Petroleum Operations (Adco) that aims at boosting daily production from about 1.6 million barrels currently to 1.8 million barrels this year.
"CNPC contributed a sign-up bonus of Dh6.5 billion [$1.8 billion] to enter the concession," Adnoc said in a statement.
The agreement was signed by Dr Sultan bin Ahmed Al Jaber, Adnoc Group chief executive officer and member of the Supreme Petroleum Council of the Emirate of Abu Dhabi, and Wang Yilin, CNPC chairman.
"Our agreement with CNPC strengthens and deepens the strategic and economic relationship between the UAE and China. This will be a mutually-beneficial partnership that will enable us to maintain strong production levels, as, together, we maximise the returns from what is a very attractive, long-term and sustainable opportunity in our onshore oilfields," said Dr Al Jaber, who is also Cabinet Member and UAE Minister of State.
Oil industry executives told Reuters on Friday that CNPC, China's top state energy group, was set to sign the concession agreement after having obtained state regulatory approval for the investment.
The deal follows a similar pact BP struck with Adnoc in December for a 10 per cent stake in the Adco concession.
The ADCO concession, including the Bab, Bu Hasa, Shah and Asab fields, has total resources of 20-30 billion barrels of oil equivalent over the term of the concession. The fields produce 1.6 million barrels per day and are expected to reach 1.8 million bpd from 2017.
"CNPC will play an active role in defining and developing technology applications in mature oil fields by planning to establish a tailor-made technology hub in Adco," Wang said.
CNPC is China's largest oil and gas producer and supplier, as well as one of the world's major oilfield service providers. It is responsible for 52 per cent of China's crude oil and 71 per cent of its natural gas production. CNPC also has oil and gas assets and interests in 37 countries in Africa, Central Asia-Russia, Americas, the Middle East and the Asia-Pacific.
Total was the first major oil company to renew the concession, securing a 10 per cent stake in January 2015 and putting its rivals under pressure to improve terms after Adnoc said the French company made the best offer.
Other Asian energy companies were granted smaller stakes. INPEX Corp of Japan, and GS Energy of South Korea received five per cent and three per cent stakes, respectively.
- With inputs from Reuters