China is the next in line to take a stake in license areas off the coast of the United Arab Emirates, following European companies into the region. File photo by A.J. Sisco/UPI | License Photo
March 21 (UPI) -- A state-owned oil company in the United Arab Emirates continued to hand out stakes in offshore production areas, this time to Chinese partners.
The Abu Dhabi National Oil Co. said Wednesday it awarded a 10 percent stake in the Lower Zakum concession and Umm Shaif/Nasr concession to China National Petroleum Corp., the third-largest oil company in the world. CNPC paid a total of $1.1 billion to enter the license areas.
"CNPC's involvement in our offshore concession areas will help to maximize the returns from what are very attractive, stable and long-term opportunities," ADNOC CEO Ahmed al-Jaber said in a statement.
The Chinese deal came just days after French supermajor Total signed two 40-year concession agreements with ADNOC that gave it a 20 percent stake in the same license areas for a fee of $1.45 billion dollars. Total said the agreement has a price tag of about $1 per barrel of reserves.
CNPC, through its PetroChina division, produces more than half of total Chinese crude oil and 70 percent of its natural gas. Last year, it took an 8 percent stake on onshore license areas in the United Arab Emirates. The Chinese company also holds a 40 percent stake in the al-Yasat complex, which is expected to enter into production later this year.
"These agreements strengthen our growing relationship with ADNOC, and will help to meet China's expanding demand for energy and contribute to asset portfolio optimization and profitability enhancement of PetroChina," CNPC Chairman Wang Yilin said.
The United Arab Emirates is a member of the Organization of Petroleum Exporting Countries and party to its multilateral effort to trim a market surplus with production caps. Emirati production in February averaged 2.8 million barrels per day, about 3 percent less than the full-year average for 2017.
Italian energy company Eni was a recent entry into ADNOC concessions. Japanese energy company INPEX was awarded a 10 percent stake in the Lower Zakum play off the coast of Abu Dhabi in February. Discovered in the 1960s, the field has a target rate of production of about 450,000 barrels of oil per day.