Growing Energy Connections With China
BMI View: We see upside risk to the UAE oil production forecast following the joint venture between ADNOC and CNPC, which will bring fresh investment to the country's upstream. The deal also highlights the growing energy partnership between the UAE and China, particularly as the UAE targets increased production and its main historical export market, Japan, is offering fewer growth opportunities.
According to state news agency WAM, Abu Dhabi National Oil Company (ADNOC) has created a joint venture with China National Petroleum Corporation (CNPC) to develop oil in the United Arab Emirates (UAE). The two companies will take a 60:40 share in Al Yasat Company For Petroleum Operations, which will target the development of both onshore and offshore oil fields in the Emirate of Abu Dhabi. The new company will largely target upstream development, though it will also hold some responsibilities for marketing and exporting the crude produced.
CNPC's move into the UAE offers the Chinese company access to the 7th largest source of oil reserves in the world, while it gives ADNOC access to the world's largest oil import market. The UAE's oil sector had traditionally been dominated by international oil companies (IOC), though the non-renewal of a number of 75-year old oil production partnerships at onshore fields opened the door for a new wave of investment. We previously highlighted the interest of Chinese and Korean companies in the UAE following the departure of IOCs ( see 'Production Target Jeopardised By Reshuffle And Delays', January 21), and expect the Al Yasat company to play a role in redeveloping some of the onshore fields.
|Targetting 3.5mn b/d By 2020|
|UAE Oil Production|