The China National Petroleum Corporation (CNPC), the world’s third largest oil company, was awarded two offshore concessions for AED 4.3 billion (US$1.18 bln) by Abu Dhabi National Oil Company (ADNOC).
CNPC, through its majority-owned listed subsidiary PetroChina, won given 10 per cent interest in the Umm Shaif and Nasr concession and a 10 per cent interest in the Lower Zakum concession, ADNOC said in a statement.
PetroChina contributed a participation fee of AED 2.1 billion (US $575 million) to enter the Umm Shaif and Nasr concession and a fee of AED 2.2 billion (US $600 million) to enter the Lower Zakum concession. Both concessions will be operated by ADNOC Offshore, on behalf of all concession partners.
The 40-year concessions were backdated to March 9, 2018.
Dr Sultan Ahmed Al Jaber, ADNOC Group CEO said the expanded collaboration with CNPC further strengthens and deepens the strategic and economic relationship between the United Arab Emirates and China, the world’s second largest economy. “Energy cooperation is an increasingly important aspect of the UAE’s relations with China, the number one oil importer globally and a major growth market for our products and petrochemicals,” he said.
“CNPC’s involvement in our offshore concession areas will help to maximise the returns from what are very attractive, stable and long-term opportunities.”
China's largest oil and gas producer and supplier, CNPC, through PetroChina, produces 52 per cent of China’s crude oil and 71 per cent of its natural gas production, and has exploration and production activities in more than 30 countries in Africa, Central Asia-Russia, America, the Middle East and the Asia-Pacific. In 2016, PetroChina produced 772.9 million barrels of crude oil and 3,464 billion cubic feet of natural gas in China.
In February 2017, CNPC was awarded an 8 per cent interest in Abu Dhabi’s onshore concession, operated by ADNOC Onshore. It also has a 40 per cent stake in the Al Yasat concession with ADNOC.
Wang Yilin, CNPC Chairman said: “These agreements strengthen our growing relationship with ADNOC, and will help to meet China’s expanding demand for energy and contribute to asset portfolio optimisation and profitability enhancement of PetroChina. To promote development of the assets, we will closely collaborate with ADNOC to deploy world class engineering solutions and advanced technology to maximise recovery from these two concessions.”
The Umm Shaif and Nasr concession, and the Lower Zakum concession have been created from the former ADMA offshore concession, with the aim of maximising commercial value, broadening the partner base, expanding technical expertise, and enabling greater market access.
CNPC joins Eni (10 per cent) and Total (20 per cent) as participants in the Umm Shaif and Nasr concession; and an ONGC Videsh led consortium (10 per cent), INPEX Corporation (10 per cent), Eni (per cent) and Total (5 per cent) as participants in the Lower Zakum concession. ADNOC retains 60 per cent majority shares in both concessions.
Meanwhile, ADNOC said it is also focusing on downstream expansion in China and Asia, where demand for petrochemicals and plastics, including light-weight automotive components, essential utility piping and cable insulation, is forecast to double by 2040.
China is the largest export customer in Asia, for Borouge, a petrochemicals joint venture between ADNOC and Borealis, accounting for 1.2 million tons per year of polyolefins, equal to one third of its sales worldwide.