China state oil company wins Abu Dhabi oilfield contract

China Petroleum Engineering and Construction Corporation, which is part of PetroChina, won the contract to help develop the Mender oilfield. Munshi Ahmed / Bloomberg

China's state oil company has won a US$330 million contract to help develop one of the fields in Abu Dhabi's major onshore oil concession.

China Petroleum Engineering and Construction Corporation (CPECC), part of China National Petroleum Corp (also referred to as PetroChina, its publicly-listed unit), won the contract to help develop the Mender oilfield, China’s official news agency Xinhua reported.

The field is expected to yield 20,000 barrels per day when developed and is part of the wider onshore South East Full Field Development project that includes the Sahil and Qusahwira oilfields, which together are expected to increase Abu Dhabi Company for Onshore Operations’ (Adco’s) output to 1.8 million bpd by the end of 2017 from the current output of about 1.4 million bpd.

The contract win for the Chinese adds to speculation that they will also be taking a stake in Adco itself. In recent weeks, companies representing countries that are major buyers of Abu Dhabi crude oil have won stakes in the new Adco concession, with new contracts running for 40 years.

Japan’s Inpex won a 5 per cent stake and South Korea’s GS Energy, backed by Korea National Oil Corp, won a 3 per cent stake in Adco.

Japan buys about 30 per cent of Abu Dhabi's crude oil output of nearly 3 million bpd, with South Korea accounting for 12 per cent.

China signed a deal in 2013 to double its imports from Abu Dhabi to 200,000 bpd last year, or about 15 per cent of total output.

Abu Dhabi National Oil Company, which controls Adco, was not immediately able to confirm the deal or comment on whether it was tied to a stake in the onshore fields.

Hou Haojie, the president of CPECC, was quoted by Xinhua as saying his company’s work on programmes to develop the $3.3 billion Habshan-Fujairah crude pipeline and the Asab oilfield helped it win the Mender contract. He said he hoped that the two companies could expand their cooperation in the future.

The Mender oilfield lies 300 kilometres south of the capital.

CPECC will be responsible for building oil-gathering stations, pipelines, power transmission lines and sewage systems.

Earlier this year, France’s Total became the first to win a stake in the new Adco concession, taking a 10 per cent share in the company and winning the lead position on two of the more sought-after fields.

In addition to PetroChina, two of the holders of the original concession, BP and Royal Dutch Shell, are thought to be still in the running for the remaining 22 per cent foreign ownership that is still up for grabs.

Adnoc will retain a 60 per cent stake.

Follow The National's Business section on Twitter