CNPC signs up to massive oil concession in Abu Dhabi

CNPC and Abu Dhabi National Oil Company (ADNOC) announced the signing of an agreement to award CNPC International, a wholly-owned subsidiary of CNPC, an 8% stake in Abu Dhabi Company for Onshore Petroleum Operations’ (ADCO) US$22 billion concession.

According to Greg Hammond, a partner at Eversheds Sutherland in London, this sizable deal means access to a share in 20-30 billion barrels and is geo-politically important as it links the UAE to China on a government-to-government basis, relying on the projected growth of China and its increasing demand for hydrocarbons as a future purchaser of oil. Also worthy of emphasis was “the importance of the technology, which the stakeholders will contribute to the project going forward”, said Hammond.

An important element of both the original tender process and the transaction itself was the use of technology, he said. “ADNOC has actively sought to maximize recovery of hydrocarbons from the onshore concession by inviting international oil companies with proven technological expertise to tender,” he said. “The use of enhanced oil recovery techniques, or EOR, and other technologies by these international oil companies will of course be beneficial to all concession-holders over the term of the new onshore concession.”