Oil majors looking to develop Abu Dhabi’s oil fields could be getting more profitable terms on their drilling contracts as part of a new governmental push to spur investment in the emirate, according to anonymous sources who spoke to Gulf News.
The British Petroleum and Total subsidiaries active in the region have already been offered the improved terms – which reduce the effects of taxation and depreciation on corporate bottom lines – for their participation in the Abu Dhabi Co. for Onshore Petroleum Operations (ADCO).
Sources from Abu Dhabi National Oil Co. (ADNOC) said the provisions changed when BP began private negotiations with the government company in December.
Total and BP each hold a ten percent stake in the ADCO model, while ADNOC has a hefty 60 percent stake. Japan’s Inpex Corp. owns five percent and South Korea’s GS Energy owns three percent, leaving 12 percent open for future investors.
The United Arab Emirates (UAE) has begun a nationwide effort to diversify its economy away from the volatility of the fossil fuel game, but not without boosting oil and gas production to fund the new ventures. ADNOC has begun partnering with European and American oil multinationals to keep output up over the coming years.
UAE Oil Minister Suhail bin Mohammed al-Mazroui said last month that it was still too early to tell if the Organization of Petroleum Exporting Countries’ recent production cut should go on beyond the planned six months.
“We are not a cartel. We are not targeting a price,” Mazroui said to Reuters, adding that $50 would be fair for some producers and unfair for others both inside and outside of the bloc.
The UAE is OPEC’s fourth largest oil producer, just behind Saudi Arabia, Iraq and Iran.
By Zainab Calcuttawala for Oilprice.com