BEIJING (Reuters) - China National Petroleum Corp (CNPC) is expected to sign a preliminary agreement with Abu Dhabi National Oil Co (ADNOC) later this month to invest in oil and gas exploration and refinery projects, four sources with knowledge of the matter said.
The agreement will be signed during a high-level Chinese state visit to the United Arab Emirates during which CNPC Chairman Wang Yilin will be on the business delegation.
“It will be a preliminary and broad cooperation deal that covers upstream and downstream investment,” said one of the sources, a Beijing-based oil executive briefed on Wang’s planned trip.
CNPC International, the state major’s overseas investment arm for oil and gas exploration and production, is taking the lead in talks with ADNOC, the executive added.
A CNPC spokesman declined to comment on the deal.
An ADNOC spokesman said the company has received “significant interest” from the market as well as from existing and new partners since it announced its plan to expand its strategic partnership model, but declined to comment on the specific deal.
China will host a high level China-Arab summit next Tuesday where President Xi Jinping will deliver the keynote speech.
“We see a trend of some Gulf countries such as Abu Dhabi, Qatar and Saudi Arabia moving to diversify away from their oil and gas reliant economy, by divesting some of those assets to free up capital for other sectors,” said a second source, a CNPC official.
ADNOC announced in April its first ever competitive exploration and production licensing round of six oil and gas blocks, with bids due by October. CNPC is set to join the bidding, said a separate CNPC source with knowledge of the matter.
ADNOC plans to double its refining capacity and triple petrochemicals output potential by 2025, as the state energy firm focuses more on downstream expansion to capture new growth markets.
CNPC, which runs its Middle East operation out of Dubai, last March won 10 percent stakes in two ADNOC offshore oilfield concessions under a 40-year deal that cost $1.2 billion.
That followed an 8 percent interest CNPC won in 2017 for $1.8 billion in Abu Dhabi’s giant onshore oilfield concession.
CNPC already operates refineries in Japan, Singapore, Sudan, Scotland and France, and is recently negotiating with Brazil for a partnership that could give China its first refining capacity in the Americas.
Reporting by Chen Aizhu in BEIJING and Florence Tan in SINGAPORE; additional reporting by Rania El Gamal in DUBAI; Editing by Christian Schmollinger