Onshore oil partners will exit Abu Dhabi consortium when concession expires in January

Adco chief says 'the relationship represented by this concession ends' when the concession period is over.

Abdul Munim Al Kindy, the chief executive of Adco. Sammy Dallal / The National

Abu Dhabi’s onshore oil production partners “are still in the race” for new concessions , said the head of the operating company.

The current, 75-year-old, rights to the fields in the Adco concession expire in January.

“We have been very clear with the partners and everybody that at the the end of this concession period, the relationship represented by this concession ends,” Abdulmunim Al Kindy, the chief executive of the operator, the Abu Dhabi Company for Onshore Oil Operations (Adco), told The National.

“[But] they are still in the race. They are still considered as companies who will put forward whatever proposal they have for the new partnership, but in no way do we envisage an extension of the partnership of Adco. Whatever time the Government and its partners conclude with a new deal, that will be a time when the new relationship starts.”

His comments follow remarks on Tuesday by Abdulla Nasser Al Suwaidi, the director general of Abu Dhabi National Oil Company (Adnoc), the consortium’s parent, that the concession’s expiration would not disrupt oil production, even if no decision had been made on renewing the Second World War-era deal, which provides more than half of the UAE’s crude output.

Adco – which includes BP, Total, ExxonMobil, Royal Dutch Shell and Portugal’s Partex – operates oilfields capable of pumping 1.6 million barrels of oil a day.

Next year, the staff of the foreign partners seconded to Adco – about 30 out of a workforce of 7,000 – will leave, and their companies’ equity in the concession will expire, according to Mr Al Kindy.

However, employees of the foreign partners who have to stay in the UAE to complete a particular task or for personal reasons, such as having children in school here, would not have to leave the country immediately, Mr Al Kindy said.

Meanwhile, Adnoc is due to receive bids this month for the production rights to the oilfields from companies including Bab, Asab and Bu Hasa.

The current foreign partners of Adco, excluding Partex, will be bidding to participate in the new consortium. The newcomers include China National Petroleum Corporation and Russia’s Rosneft. Adnoc’s recommendation on the new consortium will be reviewed by the Supreme Petroleum Council, the emirate’s top policy body for oil production.

“There’s no rush to it,” said Mr Al Kindy. “We can take our time. The Government can take the time to assess the value and to choose the best partners, whether it be someone who can offer technology or someone who can offer other advantages to the country.”

He also said that Adco’s targeted capacity increase to 1.8 million bpd by 2017, from 1.6 million bpd today, was on track regardless of the bidding process.

As Abu Dhabi has been consolidating the skills and expertise required to operate oilfields, the emirate is increasingly willing to work without foreign partners.

At the offshore Satah Al Razboot field, Adnoc has taken a 100 per cent equity stake in the project, unlike the 60 per cent it typically takes on.

“We’re not relying on the partners to bring that [the capacity increase] in. The projects (to expand capacity) are to be awarded and they are independent of whatever partner is coming,” said Mr Al Kindy. With assets worth between US$40 billion and $50bn, Adco’s relicensing deal has the potential to become the emirate’s biggest in history.

However, industry executives widely expect Abu Dhabi to split the concession field by field, as it has with newer gas developments.