Qatar has dropped out of a consortium of bidders for Occidental Petroleum’s Middle East assets in the wake of a diplomatic spat with its neighbours.
Qatar Petroleum is now seeking a financial adviser to make a solo bid, reported Bloomberg News.
Abu Dhabi’s Mubadala Petroleum and Oman Oil, which had formed a consortium with Qatar Petroleum last year to buy as much as US$8 billion in Middle East assets from the American producer, remain interested in bidding together, reported the agency.
The fracture of the consortium is one of the largest extensions of the diplomatic dispute to business ties. Last month the UAE, Bahrain and Saudi Arabia recalled ambassadors from Qatar for what was called interference in domestic affairs. Qatar, unlike other GCC members, has backed the Muslim Brotherhood in Egypt.
The split of Occidental’s Middle East holdings could have lasting effects on the region’s prime oil and gas fields.
On the auction block are assets equivalent to up to 40 per cent of Occidental, including the sole rights to two oilfields in Abu Dhabi and a share in the Dolphin pipeline that transports gas from Qatar to the UAE. Occidental is the second top oil producer in Qatar and is developing Bahrain’s Bahrain field and Iraq’s giant Zubair field.
By the end of the year, Occidental is also due to bring online a US$10 billion high-sulphur gas pumping and processing complex at the Shah field, which lies on the UAE’s border with Saudi Arabia.
Although those assets have made Occidental a peer with larger majors such as Total and ExxonMobil in the Middle East, American exploration companies have been in retrenchment since the shale boom, said Andrew Whittock, an oil and gas analyst at Liberum Capital in London. Last year Hess agreed to sell its Indonesian assets for $1.3bn, while in 2010 Devon Energy embarked on a plan to sell off all its international holdings and later on invested $6 billion in the famed Eagle Ford shale deposit.
“There’s been a series of good-size American exploration companies that have decided over the last two years that they’d rather be focused on North America than on the North Sea, the Middle East or Africa,” Mr Whittock said. “This strikes me as part of a trend amongst American upstream companies to reduce their overseas exposure and focus on North American assets, many of which are going to be shale, which they perceive to be more attractive in a risk-reward sense than investing overseas at the moment.”
Occidental said it plans to use the sale proceeds to buy back shares to boost valuations and fund drilling.
Mubadala Petroleum declined to comment yesterday.
ayee@thenational.ae
