Abu Dhabi National Oil Company's proposal to delay a bid for onshore rights could affect the emirate's ambitious production plans.
Adnoc has recommended extending the emirate's historic Abu Dhabi Company for Onshore Oil Operations (Adco) concession by one year to January 2015, according to industry sources.
The proposed extension, first reported by the trade publication Energy Intelligence last week, grants extra time for Adnoc to announce the terms of its expected tender for the prized family of oilfields and review bids from companies.
Although the extension has yet to be approved by the Supreme Petroleum Council, the emirate's decision-making body, some industry executives consider the delay a fait accompli, since the concession is now set to expire in 10 months without any sign of geological data for new bidders, a shortlist, or, of course, any winners.
"It's very obvious that if they haven't started the bidding, they won't be able to finish by the end of the year," says an oil executive.
One reason for the delay may be ongoing negotiations with ExxonMobil over a separate offshore concession, reported the trade magazine Petroleum Intelligence Weekly.
The American major, which operates the Upper Zakum field, is looking to raise its current per-barrel fee from US$1 - the same as the Adco rate - and has reportedly reached a compromise with Adnoc of $2.85 a barrel. Although a much better rate, it is still less than half the average for other fields in the region that bear more exploration or security risks.
If the deal is approved by the Supreme Petroleum Council, that would be the benchmark for Adco negotiations, and well worth the wait if it allows Abu Dhabi to get a better deal onshore.
The fields coming under the Adco concession - which include Bab, Asab, Shah and Bu Hasa - account for half of the emirate's total 2.8 million barrels per day (bpd) production capacity.
Since the Second World War these fields have been run by the western majors known today as ExxonMobil, Total, BP, Royal Dutch Shell and Partex.
Among the most expansive reserves available to foreign companies in a politically stable environment, they have been doggedly pursued by the existing partners and newcomers to the international oil competition for Abu Dhabi such as China National Petroleum Corporation, Korea National Oil Corporation and Norway's Statoil.
But the concession-bidding delay comes amid a drive to expand Abu Dhabi's overall pumping capacity to 3.5 million bpd.
Over the next three years Adnoc's subsidiaries, including Adco, must double the number of pumps required to maintain pressure at older wells - upgrades that will cost an estimated $4 billion (Dh14.69bn). "Most of the fields need more investments to increase production, and no partner will make an investment unless they get a return on that investment," says Christopher Gunson, an oil and gas lawyer.
In July, Adnoc invited more than 10 companies to submit prequalification papers. But it has not had any official communication with the bidders since.
"It's not for the overall benefit for the process of getting the fields into development, because it's another year of not knowing what will be happening," says an executive vying for a concession.
Companies wanting to tender that have not been involved in the Abu Dhabi fields before are at a greater disadvantage the longer the emirate drags out the bid, say international oil executives. "The companies who are here, they have most of the data and they could always have access to their own data - but any new player will have a completely unscripted area," says one executive.
But a short-term loss in efficiency is a necessary sacrifice, say oil analysts, for the emirate's long-term production as it seeks partners for the next 30 or 40 years.
Abu Dhabi's leaders must craft an economic structure that will motivate the technically advanced majors to use their propriety technology - a prospect that will likely involve increasing the current $1 per barrel payment to foreign partners.
"One thing for sure, I think the current terms are probably not encouraging in today's world," says AbdulKarim Al Mazmi, the general manager for BP in Abu Dhabi. "It was probably acceptable in the old days, but it's probably not with the current oil price environment."
The emirate must also balance a desire to maintain partnerships with western companies against "strategic" partners from Asia, which represents the bulk of the emirate's oil consumers.
"It takes time, time, time," says one of the executives whose company is bidding for the first time in Abu Dhabi.
"It's not transparent. That's the problem. You don't know when and how. The rules of the game can change all the way up to the last day."
ayee@thenational.ae
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Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
UAE currency: the story behind the money in your pockets
$1,000 award for 1,000 days on madrasa portal
Daily cash awards of $1,000 dollars will sweeten the Madrasa e-learning project by tempting more pupils to an education portal to deepen their understanding of math and sciences.
School children are required to watch an educational video each day and answer a question related to it. They then enter into a raffle draw for the $1,000 prize.
“We are targeting everyone who wants to learn. This will be $1,000 for 1,000 days so there will be a winner every day for 1,000 days,” said Sara Al Nuaimi, project manager of the Madrasa e-learning platform that was launched on Tuesday by the Vice President and Ruler of Dubai, to reach Arab pupils from kindergarten to grade 12 with educational videos.
“The objective of the Madrasa is to become the number one reference for all Arab students in the world. The 5,000 videos we have online is just the beginning, we have big ambitions. Today in the Arab world there are 50 million students. We want to reach everyone who is willing to learn.”
UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
Youth experience scheme to work, study or volunteer in UK and EU countries
Smoother border management with use of e-gates
Cutting red tape on import and export of food
Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
Maestro
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UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
Landfill in numbers
• Landfill gas is composed of 50 per cent methane
• Methane is 28 times more harmful than Co2 in terms of global warming
• 11 million total tonnes of waste are being generated annually in Abu Dhabi
• 18,000 tonnes per year of hazardous and medical waste is produced in Abu Dhabi emirate per year
• 20,000 litres of cooking oil produced in Abu Dhabi’s cafeterias and restaurants every day is thrown away
• 50 per cent of Abu Dhabi’s waste is from construction and demolition
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UAE currency: the story behind the money in your pockets
