BP back in running for Abu Dhabi contract

BP is back in the running for Abu Dhabi’s onshore oil concession after its unexpected earlier omission from a bidding round in which diplomatic tensions and the changing geopolitics of oil have loomed large, people familiar with the matter say.

The company was not invited over the summer to pre-qualify for bidding for the renewal in January 2014 of the emirate’s 1.4m barrel a day concession, even though it is one of four western majors that hold stakes under the existing 75-year deal.

Many observers saw the action as a calculated snub, reflecting a political disagreement between Abu Dhabi and London, as well as the emirate’s desire to bring in businesses from Asia and elsewhere.

However, Abdulla Nasser al-Suwaidi, director-general of the Abu Dhabi National Oil Company, said on Wednesday that BP was never excluded from the bidding and had no cloud over its candidacy.

“If there was anything there, it’s gone,” he told the Financial Times on the sidelines of an event to mark the opening of Abu Dhabi’s new port. “They didn’t miss anything.”

Mr Suwaidi said Abu Dhabi would shortly announce a shortlist for the concession. He said the initial pre-qualification letter was “just soliciting interest” and was “not necessary” for a big company such as BP, which – like ExxonMobil of the US, Royal Dutch Shell and France’s Total – holds a 9.5 per cent stake in the existing onshore fields.

Other people familiar with the murky five-month saga of BP’s status in the emirate also said the company had overcome its earlier difficulties and was now in the competition for the concession. The process had been helped by diplomacy including a visit to Abu Dhabi last month by David Cameron, UK prime minister, they said.

BP declined to comment on its status in the bidding, directing questions to the Abu Dhabi authorities. “We are looking forward to hearing the government’s plans on concession renewal in due course,” it said. “BP has been present in Abu Dhabi for over 70 years and we hope to play a continued role in this concession over the next 40-50 years.”

While Abu Dhabi has never given reasons for its initial decision not to invite BP to pre-qualify for the bidding, many observers have linked it to the ruling monarchy’s unhappiness with what it sees as Britain’s failure to take a harder line against the Islamist movements gaining political influence across the region.

Losing the Abu Dhabi concession would cost BP about 125,000 b/d, or 3.5 per cent of its global production, which has dipped as it sold oilfields to cover the cost of the 2010 Deepwater Horizon disaster in the US Gulf of Mexico.

But the financial loss to BP would be less dramatic, since western companies only earn about $1 for every barrel of oil they produce in the emirate.

Reporting by Michael Peel and Camilla Hall in Abu Dhabi, Simeon Kerr in Dubai and Guy Chazan in Vienna