UAE’s Abu Dhabi National Oil Company (ADNOC) has signed a 40-year deal with South Korea’s GS Energy for selling a three per cent stake in an onshore oil concession to develop its biggest oilfields
The US$676mn deal is the latest move by an import-dependent Asian country to secure energy supplies.
According to GS Energy, the stake will be South Korea’s single biggest oil asset, providing around 800mn barrels over the contract period.
Nine Asian and Western companies have bid for stakes in the Abu Dhabi Company for Onshore Oil Operations (ADCO) concession after a deal with Western majors, dating back to the 1970s, expired in January 2014. GS Energy joins Japan’s Inpex Corp and France’s Total in winning contracts so far to develop the oilfields, which produce 1.6mn bpd and have a target of 1.8mn bpd from 2017.
“By this agreement, GS E&P, a wholly-owned subsidiary of GS Energy, receives a three per cent participating interest in the new concession with effect from 1 January 2015,” ADNOC said.
Four oil majors — ExxonMobil, Shell, Total and BP — had each held 9.5 per cent equity stakes in the ADCO concession since the 1970s. After the deal expired last year, state-run ADNOC took 100 per cent of the concession as political leaders in Abu Dhabi weighed up whether to bring in Asian firms or stick with old partners, industry sources had said.
Shell and BP have also put in new bids, while ExxonMobil has decided against bidding, sources told Reuters. Total became the first oil major to renew the concession, putting peers under pressure to improve terms after the local partner said the French firm made the best offer. Other bidders for the concessions include Occidental Petroleum, Italy’s ENI, CNPC and Norway’s Statoil.
