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November 13, 2012 6:09 am
Abu Dhabi plans to draw up a final shortlist for its giant onshore oil concession as early as next month, moving a step forward in a process that is being closely watched as a sign of the balance of geopolitical power in the Gulf.
BP remains among possible contenders for the deal, despite its surprise exclusion this summer from early invitations to bid, a leading Abu Dhabi oil official said.
At stake is a giant 75-year concession that has historically been the preserve of leading western oil companies, but may now be opened to new entrants from emerging economies in Asia and elsewhere.
“The concession is more than 50 per cent of Abu Dhabi’s reserves so it’s worth it, all this time it takes to find the best for Abu Dhabi as a whole,” Abdulla Nasser al-Suwaidi, director-general of Adnoc, the emirate’s national oil company, said this week.
Speaking to reporters at the Adipec global energy conference in Abu Dhabi, Mr Suwaidi said a shortlist of companies was still being prepared before submission for approval to the Supreme Petroleum Council, the ultimate decision maker on the concession, which comes up for renewal in January 2014. The companies on that list will then have to submit proposals on how they would run the 1.4m barrel a day oilfields.
“We are quite advanced [in the process],” said Mr Suwaidi, adding that the council may decide on the final shortlist by the end of the year or the start of 2013. He said the recommendation was not to divide the concession into separate blocks, which some analysts have suggested would have been a way for the Abu Dhabi authorities to involve more companies.
Many in the oil industry had hoped the concession would have been awarded in time for the Adipec conference, whose attendees included thousands of industry insiders, including the chief executives of BP and Total. But progress on the deal has been slow and companies are desperate for any hint as to where they stand with the Abu Dhabi authorities.
BP, one of the current concession partners, has been omitted from what Mr Suwaidi described in July as a “big list” of companies invited to bid for the renewal deal.
While both sides have stressed that talks about BP’s position are continuing, many observers in Abu Dhabi see the company as a casualty of official anger with the UK. Figures in the United Arab Emirates government have been irritated by media criticism of it in the UK and by London’s alleged failure to take a tougher line against Islamist groups the UAE administration views as an existential threat.
David Cameron, British prime minister, visited the UAE last week as part of a government push to improve relations with Abu Dhabi and other Gulf capitals.
But Mr Suwaidi insisted this week that “everybody has a chance” in the concession, signalling that it may not be too late for BP.
Bob Dudley, BP’s chief executive, also tried to strike a positive note about the company’s future in Abu Dhabi. “The people in the company that are working here, the capital that we’re investing here is absolutely rock steady,” he said. “For us, as long as we keep meeting our commitments as if we always were and we will, that’s the right thing for us.”
The current concession partners, which also include Shell, ExxonMobil and Total, face new competition from companies linked to the large Asian energy consuming countries with which the UAE is building close relationships.
Abu Dhabi awarded the state-run Korea National Oil Corporation a smaller concession in March, after it agreed to invest about $2bn to take a 40 per cent stake in the blocks with estimated reserves of 570m barrels. Analysts expect Chinese companies to be strong bidders for the main onshore deal.
This article has been amended since original publication to reflect the reference to Abu Dhabi’s onshore, and not its offshore, oil concession.
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