Inpex gains Abu Dhabi oil stake

Japanese firm becomes the first Asian company to win an onshore oil contract

Japanese oil company Inpex Corporation has acquired a five per cent stake in developing Abu Dhabi onshore oilfields, making it the second company after French energy giant Total to be awarded the contract known as Abu Dhabi concession.

The agreement, effective January 1, 2015, is for a period of 40 years, the company said in a statement yesterday.

Inpex becomes the first Asian oil company to win the concession. Total was said to have paid $2.2 billion (Dh8 billion) as a signing bonus to win a ten per cent stake in late January.

It is not known how much Inpex paid but according to Japanese public broadcaster NHK the value of the deal was expected to be worth $1.1 billion.

The concession is made up of 15 principal onshore oilfields, of which 11 are currently in production and four remain undeveloped.

Combined, these make up one of the world’s largest deposits of oil producing 1.6 million barrels per day.

Operations

The oilfields are being operated by Abu Dhabi Company for Onshore Oil Operations (Adco), a subsidiary of Abu Dhabi National Oil Company (Adnoc), which holds 60 per cent share while remaining 40 per cent is being given to various international companies.

The new concession has been necessitated following the expiry of an old agreement with international companies dating back to the 1970s in January last year.

A number of companies are bidding for stakes including Royal Dutch Shell, BP, Occidental Petroleum of the US, Statoil of Norway, China National Petroleum Corporation (CNPC), South Korea’s Korea National Oil Corporation and Italy’s ENI.

“This new acquisition in Abu Dhabi, positioned as one of the core areas for Inpex’s petroleum development and production operations, is highly significant in terms of the company’s growth strategies, and also largely contributes to the long-term, stable supply of energy to Japan,” Toshiaki Kitamura, president and chief executive officer of Inpex Corporation, said in a statement.

An Energy expert based in London said it was not surprising to see an Asian company being selected for the concession. “Over 90 per cent of the crude oil from Abu Dhabi is exported to Asian markets, and the emirate is trying to cement its relationship with Asian countries,” said Richard Mallinson, an energy expert at Energy Aspects.