Abu Dhabi National Oil Company agreed to transfer rights to the Lower Zakum and Umm Shaif and Nasr concessions from China National Petroleum Corporation (CNPC) to its offshore subsidiary China National Offshore Oil Corporation (CNOOC).
Abu Dhabi’s Supreme Petroleum Council approved the transaction of the offshore assets. CNOOC is the first Chinese offshore firm to engage in the production of Abu Dhabi’s hydrocarbon assets. The company indirectly acquired 4 per cent of CNPC’s 10 per cent interest in each of the offshore concessions.
“CNOOC joins our other international partners in the Lower Zakum and Umm Shaif and Nasr concessions and bring world-class expertise and technology to help us continue to maximise value from the concessions as we create a more profitable upstream business and deliver our 2030 strategy,” said Dr Sultan Al Jaber, Adnoc Group chief executive and UAE Minister of Industry and Advanced Technology.
The UAE, Opec's third-largest producer, plans to increase its output capacity to 5 million barrels per day by 2030. The country achieved its planned capacity target for 2020, reaching 4.2m bpd capacity in April, the country's energy minister Suhail Al Mazrouei said in June. The UAE's output reached 2.349m bpd in June, according to Opec's latest oil market report.
In 2018, CNPC subsidiary PetroChina picked up a 10 per cent interest in the Lower Zakum and Umm Shaif and Nasr concessions for Dh4.3bn. At the time, the transaction made China one of the largest foreign energy partners in the UAE.
PetroChina, CNPC’s listed arm and the country’s biggest oil producer, also manages concessions in Iraq. It paid a participating fee of Dh2.1bn to enter Umm Shaif and Nasr and Dh2.2bn for Lower Zakum.
Following the latest transfer of shares, PetroChina will have a 6 per cent interest in the two offshore concessions with CNOOC retaining the remaining 4 per cent.
The deal will allow the two Chinese firms to "help reinforce the development" of the concessions, said CNPC chairman Dai Houliang.
CNOOC and Adnoc also previously signed an agreement in 2019 to explore opportunities in the upstream and downstream sectors, as well as liquefied natural gas.
The Lower Zakum concession is being jointly developed by a consortium led by India’s ONGC and Japan's Inpex, both of which have 10 per cent stakes.
CNPC has a 6 per cent interest, while Italy’s Eni and France's Total each have 5 per cent stakes in the offshore concession.
In the Umm Shaif and Nasr concession, CNOOC joins Eni with 10 per cent, Total with 20 per cent and CNPC with 6 per cent interests. Adnoc retains the majority 60 per cent share across both concessions.