Abu Dhabi National Oil Company is weighing bids for the remaining prime onshore oilfields that are still up for grabs after France's Total last month won the top parcel of concessions on offer.
The Total win was the culmination of a year-long process that initially involved 11 companies, including four of the original five foreign shareholders in the onshore concession, which dates back to the 1930s: Total, BP, Royal Dutch Shell, and ExxonMobil.
While Exxon dropped out early last year to concentrate instead on its large offshore Abu Dhabi project, the Upper Zakum field development, the list of competitors was expanded to include several Asian firms that are big customers for Abu Dhabi's crude oil — PetroChina, Inpex of Japan and Korea National Oil Co — as well as Occidental Petroleum of the US, Statoil of Norway, Eni from Italy and Rosneft, Russia's largest oil company.
The companies were asked the week before last to submit revised bids for 10 per cent or 5 per cent shares in the new Abu Dhabi Company for Onshore Operations, Adco, with terms matching those agreed to by Total.
Adnoc owns 60 per cent of Adco. Total now holds 10 per cent. Both BP and Shell have submitted new bids, according to industry sources, although none of the companies made any official statement on the process, referring questions instead to Adnoc for any updates.
A Shell spokesman said: “We refer to Adnoc for the status of the new concession for onshore oil … Our aspiration is to continue to be a partner in the Emirate’s energy future.”
Abdulla Al Suwaidi, Adnoc’s director general, was quoted yesterday by Bloomberg News at a Dubai conference that the deadline for revised bids is today, and Mr Al Suwaidi reiterated that remaining bidders must match Total’s terms.
Those terms have not been disclosed, although analysts are assuming that Total paid a “signing bonus” of about US$2 billion, based on the 10 per cent share of the fields Total will have rights to over the 40-year life of the contract.
“If you say they are buying roughly 2.2 billion barrels and that they pay on average $2 per barrel on higher margin barrels they have acquired, then you would expect the signing bonus to be materially below that,” said Irene Himona, a London-based analyst who covers Total for Société Générale.
Therefore, the French bank calculates that Total will pay out about $2bn this year to acquire the concession and will have revenue of $166 million a year from its share, rising to $190m a year when Adco production rises to an expected plateau of 1.8 million barrels per day from the end of 2017 from 1.6 million bpd currently.
That revenue projection is based on assumed fee of $2.85 per barrel for Total, which is the royalty Exxon agreed for Upper Zakum, up from the $1 per barrel paid on the old concession.
When the deal was an announced at the end of last month, the Total chief executive Patrick Pouyanné demurred on specific commercial terms.
But Mr Pouyanné did say that the deal involved “multiple targets” as “asset leader” for fields that represent two-thirds of Adco’s entire production, as well as the ability to make additional margin by marketing the physical crude that Total receives as payment.
Brent crude was trading yesterday afternoon at $58.20 a barrel.
amcauley@thenational.ae
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