China’s CNPC buys stake in $22b Abu Dhabi oil venture
DUBAI: China National Petroleum Corp. (CNPC) bought a stake in Abu Dhabi’s largest oil concession as the Middle Eastern emirate with 6 per cent of global crude reserves looks increasingly to Asia, its biggest market, for investment to raise output capacity.
Abu Dhabi National Oil Co. awarded CNPC an 8 per cent stake in the onshore venture in return for a $1.8 billion signing bonus, Adnoc said in a statement. State-run CNPC is the venture’s third Asian partner, joining Japanese and South Korean companies alongside BP and Total. BP signed on to the project in December, and Total in January 2015.
Fastest growth
Asia will show the fastest growth in energy demand over the next two decades, according to the International Energy Agency. Abu Dhabi is among the Gulf oil producers including Saudi Arabia and Iraq that are tapping Asia for energy investments. While European and US companies have pumped oil in the Middle East for more than a century, their Asian counterparts are relative newcomers.
“If you are Abu Dhabi and looking for demand growth, China is the future and its demand is going to continue to grow,” Chris Gunson, a Dubai-based lawyer at Amereller Legal Consultants, said on Sunday.
“For the big buyers in Asia, the logical source of that future supply is the Gulf,” he added.
CNPC is joining the Abu Dhabi Company for Onshore Petroleum Operations, or ADCO. BP and Total each hold 10 percent stakes in the venture, while Japan’s Inpex Corp. owns 5 percent and GS Energy Corp. of South Korea holds 3 per cent. Abu Dhabi plans to retain a 60 per cent stake in ADCO and is seeking an investor for the remaining 4 per cent, Adnoc said in the statement.
Japanese companies are partners in at least four other oil-production ventures in Abu Dhabi, the largest emirate in the UAE. Korean and Chinese companies are exploring at smaller concessions in the emirate. CNPC’s engineering arm also helped build an export pipeline in Abu Dhabi.
Elsewhere in the region, CNPC is developing Iraq’s biggest oil field, together with BP. China Petroleum and Chemical Corp. is a partner in a refinery in Saudi Arabia, and Chinese firms are developing crude deposits in Iran.