US energy firm Occidental Petroleum, a big player in the Permian shale basins expects to see “shift" in more production growth to the Middle East over the coming years, even as it mulls opportunities downstream in the region.
"While our company is growing with the production right now in the Permian Basin, we expect that over time that will shift and more growth will come from our operations here in the MiddChle East," Occidental Petroleum chief executive Vicki Hollub told The National in an interview in Abu Dhabi.
Houston-headquartered Occidental Petroleum is the biggest player in the Permian Basin, the largest shale basin in in the US where production averaged 3.831 million barrels per day in January, according to the Energy Information Administration. Occidental, which has operations in the Middle East and Latin America currently sees less than half of its production come from international operations.
A new area of interest for the energy firm in the Middle East is the downstream sector, which has seen multibillion dollar investment commitments from national oil companies in the UAE and Saudi Arabia. Occidental Petroleum was awarded an onshore block by the Abu Dhabi National Oil Company on Sunday for a participating fee of Dh893 million ($244m).
The US firm will hold a 100 per cent stake in the onshore Block 3 in the exploration phase as part of its 35-year concession agreement.
Ms Hollub sees possibilities of expansion in partnership downstream following the recent sale of stakes in Adnoc's refining units to existing upstream partners Eni and OMV of Italy and Austria.
"We’re looking at downstream here in the Middle East," she said. "We like the fact that Dr Sultan [Al Jaber, Adnoc Group chief executive] has a view in Abu Dhabi that he wants to take all the value chain and convert that into value for the country. We support that.”
Occidental, which also has a significant North American chemicals business in the polyvinyl chloride (PVC) resins, chlorine and caustic soda segments, which find uses in the plastics and petrochemicals industries will look at possible synergies in the Middle East.
“We export products out of the United States to other markets so we feel like there’s a possibility that at some point we could build [that] here in the Middle East,” said Ms Hollub.
Another opportunity for the North American company, which has 450,000 bpd export capacity in the US is the possibility of entering into the trading business in the Middle East - a segment of increasing interest for state-backed energy firms in the region.
Following the sale of stakes in its refining unit last month, Adnoc invited its downstream partners Eni and OMV to establish a three-way trading joint venture.
“Exports are being traded both in Asia and in Europe right now. So we’re selling oil in both places. Marketing here in the Middle East is something that we’ve done in the past and we’ll figure out the best way to extract value for our products,” said Ms Hollub.
The company is currently in “transition phase” with Qatar Petroleum in exiting the Idd El-Shargi field, which has been set for October, she said.
Occidental remained interested in “other opportunities” upstream in Abu Dhabi but declined to comment in detail. "We’re processing some things internally,” she said.
Elsewhere in the Middle East, Occidental will continue to advance development of exploration in blocks 9, 27 and 30 in Oman following completion of 3D seismic assessment.