China Wins Big With Stakes in $22 Billion Abu Dhabi Oil Deal

[onebyone]

China Wins Big With Stakes in $22 Billion Abu Dhabi Oil Deal
by Anthony Dipaola
and Mahmoud Habboush
21 กุมภาพันธ์ 2560 04:00 GMT+7

• Abu Dhabi awards CEFC China Energy final 4 percent of venture
• Foreign partners in ADCO include BP, Total, China’s CNPC

Chinese companies are big winners in the competition among foreign bidders for stakes in Abu Dhabi’s largest oil concession, snatching a combined 12 percent of the venture as the Middle Eastern emirate looks increasingly to Asia, its biggest market, for investment.

Abu Dhabi National Oil Co. awarded a 4 percent stake in the onshore venture -- the last share of the project that was still up for grabs -- to Shanghai-based CEFC China Energy Co., Adnoc said in an e-mailed statement. CEFC is paying an $888 million signing bonus, Adnoc said Monday. The announcement came one day after China National Petroleum Corp. agreed to buy 8 percent of the same concession for $1.8 billion.

The dual awards mark China’s debut as a major shareholder in the biggest oilfield operator in the United Arab Emirates, OPEC’s fourth-largest member. Together, the stakes held by state-run CNPC and energy investor CEFC exceed the 10 percent shares that both BP Plc and Total SA own. BP signed on to the project in December, and Total in January 2015.

Asia will show the fastest growth in energy demand over the next two decades, according to the International Energy Agency. Abu Dhabi is among Persian Gulf oil producers including Saudi Arabia and Iraq that are tapping Asia for energy investments. While European and U.S. companies have pumped oil in the Middle East for more than a century, their Asian counterparts are relative newcomers. Japanese and Korean companies are also investors with Adnoc in the deposits.

“You can see the attraction for Abu Dhabi and for China on both sides of this deal,” Richard Mallinson, an analyst with Energy Aspects Ltd. in London, said Monday by phone. “In China, Abu Dhabi sees a huge and growing importer. China’s gone to great lengths to establish supply footholds, so there’s a real benefit in tapping large and stable reserves.”

Export Pipeline

CNPC and CEFC are joining the Abu Dhabi Co. for Onshore Petroleum Operations, or ADCO. Japan’s Inpex Corp. owns 5 percent of the venture, while GS Energy Corp. of South Korea holds 3 percent. No companies from Asia were involved in the previous concession for the onshore fields. Abu Dhabi plans to retain a 60 percent stake in ADCO.

Japanese companies are partners in at least four other oil-production ventures in Abu Dhabi, the largest sheikhdom in the United Arab Emirates. Korean and Chinese companies are exploring at smaller concessions in the emirate. CNPC’s engineering arm also helped build an export pipeline in Abu Dhabi.

Elsewhere in the region, CNPC is developing Iraq’s biggest oil field, together with BP. China Petroleum and Chemical Corp. is a partner in a refinery in Saudi Arabia, and Chinese firms are developing crude deposits in Iran.

With the two deals announced this week, Chinese buyers secure more supplies of Abu Dhabi’s main Murban crude grade. CNPC agreed in 2011 to increase purchases of crude from the emirate under long-term contracts.

Read more: Abu Dhabi improves terms for concession partners

Abu Dhabi, with 6 percent of global crude reserves, is seeking to boost production capacity to 3.5 million barrels a day by 2018. ADCO pumps about half of Abu Dhabi’s roughly 3 million barrels of daily crude output.

The emirate is expanding capacity amid a global oil glut that cut prices to an average of about $50 a barrel over the last two years. The Organization of Petroleum Exporting Countries agreed in November to cut production to trim crude stockpiles and boost prices. Brent crude has gained about 11 percent since the day OPEC announced that agreement and was up 0.8 percent at $56.23 a barrel at 1:22 p.m. in London.

The 40-year ADCO concession replaces an earlier agreement. Exxon Mobil Corp. and Royal Dutch Shell Plc took part in the previous venture, also called ADCO, along with BP, Total and Portugal’s Partex Oil & Gas Group.

https://www.bloomberg.com/news/arti...kes-in-22-billion-abu-dhabi-oil-deal-izel5rn7

 

[ali_raza]

china is the future super power

 

[Beast]

I wonder the wisdom of signing such a huge deal on oil for future. Maybe in another decade time. 80% passenger car runs on electric with nuclear and renewable source generating most electricity.

 

[Bussard Ramjet]

I wonder the wisdom of signing such a huge deal on oil for future. Maybe in another decade time. 80% passenger car runs on electric with nuclear and renewable source generating most electricity.

I totally agree. Already China has burned its hands with oil deals.

Just today, I learned that Sinochem is selling its stake in a Brazilian Oil field at a massive loss.

http://www.reuters.com/article/us-sinochem-m-a-idUSKBN1600MW

What I see in many Chinese companies is that they are too immature in spending abroad.

Lenovo acquired Motorola, with ZERO patents. Without any patent acquisition, Motorola acquisition was set to fail. And it has. Lenovo's CEO confirmed that the acquisition turned out to be a big disappointment.

HNA acquired Ingram Micro, and I can't think of one thing why that deal will succeed in the longer term.

Chinese companies should invest in China, in research, branding etc. to become major firms.

 

[HannibalBarca]

I totally agree. Already China has burned its hands with oil deals.

Just today, I learned that Sinochem is selling its stake in a Brazilian Oil field at a massive loss.

http://www.reuters.com/article/us-sinochem-m-a-idUSKBN1600MW

What I see in many Chinese companies is that they are too immature in spending abroad.

Lenovo acquired Motorola, with ZERO patents. Without any patent acquisition, Motorola acquisition was set to fail. And it has. Lenovo's CEO confirmed that the acquisition turned out to be a big disappointment.

HNA acquired Ingram Micro, and I can't think of one thing why that deal will succeed in the longer term.

Chinese companies should invest in China, in research, branding etc. to become major firms.

I wonder the wisdom of signing such a huge deal on oil for future. Maybe in another decade time. 80% passenger car runs on electric with nuclear and renewable source generating most electricity.

Oil will stay for at least till the end of the century and even more. So yes investing in oil, even though "green" energy is growing, is a good one.

oil is not only for fuel...... it's only a fraction of it used for that...

 

[RISING SUN]

China and India chase stakes in Abu Dhabi offshore oil fields
By Anthony DiPaola and Mahmoud Habboush
China and India are each targeting a share of Abu Dhabi’s largest offshore oil fields as the Persian Gulf producer seeks partners to boost output and ensure exports of its oil to two of the world’s most promising markets.

A stake in the offshore oil concession that’s set for renewal in March would mark a second big win of crude development rights in the emirate for China National Petroleum Corp. CNPC, which in February bought into Abu Dhabi’s largest cluster of onshore fields, agreed on Wednesday with Abu Dhabi National Oil Co. to study cooperation in areas including offshore energy and natural gas deposits, Adnoc said in a statement.

India’s state-run Oil and Natural GasBSE -1.03 % Corp. too is bidding for stakes in the fields off Abu Dhabi’s coast, Amar Nath, an Indian government representative on the company’s board, said Wednesday at a conference in Abu Dhabi, the United Arab Emirates capital. The Indian company will bid through its wholly owned international arm ONGCBSE -1.03 % Videsh Ltd., said Nath, who is also a joint secretary for exploration at the country’s oil ministry.

“The U.A.E. has been a very important partner for a long time, and we have had energy interaction for a long time, but now we want to move beyond that,” Nath said. “In order to enhance that, our companies are participating.”

Oil-rich states in the Middle East are looking increasingly to Asia, their biggest market, for funds to help build infrastructure and develop new industries. The drop in oil prices by half from highs of over $100 a barrel in 2014 is driving the producers to cut spending, improve efficiency and seek new sources of money.

CNPC will discuss a partnership at the offshore Lower Zakum, Umm Shaif and Nasr fields, according to Adnoc’s statement. The three areas are part of the concession expiring in March. Adnoc currently has 60 per cent of the block, with BP Plc, France’s Total SA and Inpex Corp. of Japan holding the rest.

BP Chief Executive Officer Bob Dudley said Monday in an interview in Abu Dhabi that his company wants to renew its participation in the offshore fields. Wintershall AG also is “very interested’ in the offshore fields Adnoc is tendering, CEO Mario Mehren told reporters in the city on Tuesday. More than a dozen international companies expressed interest in the concession, Adnoc CEO Sultan Al Jaber said Monday.

BP secured a 10 per cent stake in the onshore concession in December, agreeing to pay a $2.2 billion signing fee to Adnoc in shares rather than cash. Adnoc’s other partners in the onshore deposits are CNPC, Total, Inpex, Korea’s GS Energy Corp. and CEFC China Energy Co.
https://economictimes.indiatimes.co...m_referrer=https://www.google.co.in/&from=mdr

 

[Han Patriot]

I totally agree. Already China has burned its hands with oil deals.

Just today, I learned that Sinochem is selling its stake in a Brazilian Oil field at a massive loss.

http://www.reuters.com/article/us-sinochem-m-a-idUSKBN1600MW

What I see in many Chinese companies is that they are too immature in spending abroad.

Lenovo acquired Motorola, with ZERO patents. Without any patent acquisition, Motorola acquisition was set to fail. And it has. Lenovo's CEO confirmed that the acquisition turned out to be a big disappointment.

HNA acquired Ingram Micro, and I can't think of one thing why that deal will succeed in the longer term.

Chinese companies should invest in China, in research, branding etc. to become major firms.

Buss, you need to calm down and stop thinking the Chinese as idiots and also stop thinking you are a genius. Deep sea oil is dead because of oil prices not because people were stupid to invest there 5 years ago, if you read the article, even ONGC is looking to sell the same asset. All investments has got risk, even your beloved TATA is a lesson for all.

Lenovo acquired IBM PC with ZERO PATENTS, and look what they became? MOTOROLA acquisition actually made sense commercially, they are turning it around and relocating alot to China to reduce cost. The only way for a Chinese company to sell in US is by buying a US brand, else it will take decades. The same reason why HAIER bought GE. Use US branding and Chinese manufacturing and logistics, you can easily capture a big chunk of the market.

HNA is a private company making billions, they are not stupid, there is a reason why they want to buy Ingram Micro. These are not just SOEs, these are businessmen investing because they see a potential, whether it works out or not, we shall see.

 

[Bussard Ramjet]

Buss, you need to calm down and stop thinking the Chinese as idiots and also stop thinking you are a genius. Deep sea oil is dead because of oil prices not because people were stupid to invest there 5 years ago, if you read the article, even ONGC is looking to sell the same asset. All investments has got risk, even your beloved TATA is a lesson for all.

Lenovo acquired IBM PC with ZERO PATENTS, and look what they became? MOTOROLA acquisition actually made sense commercially, they are turning it around and relocating alot to China to reduce cost. The only way for a Chinese company to sell in US is by buying a US brand, else it will take decades. The same reason why HAIER bought GE. Use US branding and Chinese manufacturing and logistics, you can easily capture a big chunk of the market.

HNA is a private company making billions, they are not stupid, there is a reason why they want to buy Ingram Micro. These are not just SOEs, these are businessmen investing because they see a potential, whether it works out or not, we shall see.

Firstly, you are replying after 9 months, but still let's take your reply.

1. No one thinks Chinese as idiots, specially me.
2. Oil is dead due to structural reasons.
3. These structural reasons include the huge uptake and plans for EV vehicles, specially in China; as well as the discovery of huge recoverable shale reserves; AND excessive capacity to produce oil in many countries.
4. Chinese SEOs are NOT strictly businesses, with commercial interests only.
5. HNA is NOT a private company any more. It is owned by a charity.
6. HNA is ALREADY suffering. They have taken so much debt that they are issuing bonds at RECORD interest rates to refinance and pay back those debts.
7. HNA is in fact an EXAMPLE of how NOT to do stuff.
8. Lenovo is indeed a commercial company and like all commercial companies it takes some bets based on its interests. It's IBM business acquisition was indeed a success. HOWEVER, it's Motorola business acquisition has already been declared a failure by multiple people in its senior management and board.

Please let me know if you want citations for any of the above points.

 

[Han Patriot]

Firstly, you are replying after 9 months, but still let's take your reply.

1. No one thinks Chinese as idiots, specially me.
2. Oil is dead due to structural reasons.
3. These structural reasons include the huge uptake and plans for EV vehicles, specially in China; as well as the discovery of huge recoverable shale reserves; AND excessive capacity to produce oil in many countries.
4. Chinese SEOs are NOT strictly businesses, with commercial interests only.
5. HNA is NOT a private company any more. It is owned by a charity.
6. HNA is ALREADY suffering. They have taken so much debt that they are issuing bonds at RECORD interest rates to refinance and pay back those debts.
7. HNA is in fact an EXAMPLE of how NOT to do stuff.
8. Lenovo is indeed a commercial company and like all commercial companies it takes some bets based on its interests. It's IBM business acquisition was indeed a success. HOWEVER, it's Motorola business acquisition has already been declared a failure by multiple people in its senior management and board.

Please let me know if you want citations for any of the above points.

Buss,

I work in the oil industry:

3) EV uptake has minuscule impact on oil prices, you forgot for every EV bought, there are 20 petrol cars sold annually, Chinese oil uptake is still growing since the oil crash. The real reason was over supply due to shale oil. Please don't argue, I have been through multiple corporate briefings, I am sick of explaining this.

4) Agreed, SOEs are not strictly business but unlike the PSUs in India, their performance is profit driven except for a few strategic sectors like rail. So if you report loss for 5 years, China will actually sell you off. These people are not idiots like you say, so you get what I mean. India is the direct opposite, it is politically driven.

5) HNA is now a charity controlled privately with 33% owned by private hands. The verdict depends on the market, if they suck they perish. Again, these people are not idiots.

8) Lenovo just took over MOTOROLA for around a year. What do you expect? Multiple people like? Who? You need at least 3-5 years to turn around the business and the latest news show sales were up 71% in EU alone. In US it was a 100% increase.

https://www.mysmartprice.com/gear/2...share-in-the-us-following-lenovo-acquisition/