Talks with international oil companies are continuing to grant them concessions to manage Abu Dhabi’s onshore oilfields, the chief executive of Abu Dhabi Company for Onshore Oil Operations (Adco) said on Monday.
Adco has no timeline to award the remaining concession stakes and is in no hurry to do so, Abdul Munim Al Kindy said at the Adipec oil conference in Abu Dhabi.
Adco operates the country’s largest onshore oilfields, which are responsible for more than half of the UAE’s oil output.
“We are talking about huge reserves,” said Mr Al Kindy. “We are talking about 100 billion barrels of oil in place, and gas. We are talking about a 40-year concession, so it is reasonable that companies will take their time to convince their boards of the viability of the opportunities.”
The Adco concession, as it is called, expired at the end of 2013 and state-run Abu Dhabi National Oil Company has been evaluating bids for new contracts for more than a year. Adnoc holds a 60 per cent stake in the concessions and is looking to award the remaining stakes after France’s Total won a 10 per cent stake, South Korea’s GS Energy won a 3 per cent stake and Japan’s Inpex won a 5 a per cent stake.
Awarding the remaining stakes is key to the UAE’s plans to boost its oil output capacity to 3.5 million barrels per day by 2017 from about 3 million bpd today.
Adco is spending $5 billion to step up its output capacity to 1.8 million bpd by 2018 from 1.6 million bpd today.
Adco is also looking to cut capital expenditure next year by about 33 per cent to $5bn as the low crude prices push oil companies in the UAE to trim costs.
Adnoc is targeting cost savings of 25 per cent on major oil projects, a top official said last week. The savings target is more ambitious than the 10 to 15 per cent the company announced in May it was seeking.
Adco will slash capex without cutting jobs or procurement. It plans to increase the number of rigs to 67 next year from 50 and will drill more wells.
“We are committed to achieving our targets with optimised resources,” said Mr Al Kindy.
The international crude benchmark Brent has dropped by more than 50 per cent from last year’s $115 a barrel because of the oil supply glut, weaker demand in Asia and a strong dollar, prompting companies to cut costs.
But Adco can still operate with $20 a barrel oil, said Mr Al Kindy. “We present all our projects [and] proposals with different sensitivities starting with $20 a barrel upwards, and I can assure you that most of our projects are viable even at those prices,” he said.
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