* Foreign oil company staff to keep working as service
* Disagreement over which companies best suited delays
* Western oil majors' knowledge of fields may see them
By Daniel Fineren and Stanley Carvalho
DUBAI/ABU DHABI, Jan 8 Abu Dhabi will take full
control of the UAE' biggest oilfields when its decades-old
venture with four western oil giants ends this weekend, while it
weighs new partnerships that could include its long-term
collaborators or Asian newcomers.
The OPEC member country has held a 60-percent stake in Abu
Dhabi Company for Onshore Oil Operations (ADCO) since acquiring
an interest in fields that produce over half the United Arab
Four of the world's largest stock-listed energy companies -
ExxonMobil, Royal Dutch Shell, Total
and BP - have each held 9.5 percent equity stakes in the
ADCO concession since the 1970s and would be keen to prolong
After their current deal expires on Jan. 11, Abu Dhabi
National Oil Company (ADNOC) will take 100 percent of the ADCO
concession in what is seen as a temporary measure while
political leaders in the UAE capital decide whether to let big
Asian oil buyers in for the long-haul.
"All of the shareholdings of the foreign partners will go
back to ADNOC," a spokesman for ADNOC said on Wednesday after a
ceremony to mark the end of the 75-year existing partnership.
He declined to comment on when the government of Abu Dhabi
might be ready to award the next long-term deals to run them.
The concession expiry means the western partners will not be
paid in oil until the new partners are decided, but the
companies will continue to work on the fields as service
providers in the interim, an industry source said.
"The majors cannot be replaced from one day to the next,
this does not end their working relationship," the source said.
The western oil companies are among the hopefuls vying to
keep running the fields for decades to come and their technical
experience in operating the fields is seen by many in the
industry as vital to squeezing the most out of them.
Last year's award of a $10 billion gas project that will see
Shell tackle highly toxic gas at a field within the ADCO
concession strengthens its bid to continue operating the
But in the half century that has passed since they made the
first commercial oil discovery in 1960, western oil demand has
started to wane, while consumption in Asia has soared, spurring
Asian companies to seek security in stakes in oil and gas fields
around the world.
ABU DHABI SPLIT
ADNOC director-general, Abdulla Nasser Al Suwaidi, said back
in November 2012 that ADNOC would recommend that the Supreme
Petroleum Council of Abu Dhabi (SPC) maintain the current
The SPC in the past has typically gone along with ADNOC's
But the dilemma now dividing the SPC, some industry
observers say, is whether to stick with the U.S. and European
companies or make room for some Asian newcomers. These would
offer a chance to strengthen political ties with the UAE's
biggest oil buyers such as China, Korea and Japan.
Until the Council can agree ADNOC will have full control.
"There is no one consolidated view of how the future Abu
Dhabi upstream oil and gas sector should look," said Christopher
Gunson, a Dubai-based lawyer at the law firm Pillsbury.
He said some in Abu Dhabi would like to see ADNOC run the
concession alone in the long term, while other Abu Dhabi oil
officials see more benefits to maintaining the status quo.
Abu Dhabi signed the 75-year agreements with western oil
companies in January 1939. The government acquired a 60-percent
share in the early 1970s and the Abu Dhabi Company for Onshore
Oil Operations was formed in 1978.
Collectively the ADCO fields produce around 1.5 million
barrels a day (bpd), compared with total UAE production of
around 2.75 million bpd, with most of the output coming from
five fields: Asab, Bab, Bu Hasa, Sahil and Shah.
ExxonMobil, Shell, Total and BP currently receive equity
share of Murban crude from the fields.
ADNOC plans to sell these volumes through one-year term
contracts with the oil majors while the OPEC producer decides
which companies will become its equity partners.
Some big oil companies, notably ExxonMobil, have
expressed concern about operating side by side with rivals in an
ADNOC-controlled concession, with all partners expected to share