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Abu Dhabi and China move towards exploration contract

15th June 2012

Abu Dhabi and China are moving towards a closer partnership in oil exploration as plans take shape for a drilling campaign in the emirate as soon as next year, say officials

China's largest oil company has studyied seven exploration blocks in Abu Dhabi, five onshore and two offshore

Abu Dhabi National Oil Company (Adnoc) and China National Petroleum Corporation (CNPC) are expected to start detailed talks next month building on a strategic cooperation agreement signed in January during a visit by Wen Jiabao, the Chinese premier, according to reports.

"China is like many countries in the Far East," said Mohammed Al Hamli, the UAE Energy Minister. "It's one of the major importers of our crude, and it's natural that we strengthen our relationship with the Chinese and with all the countries of the world who have been doing business with us."

Wang Dongjin, CNPC's vice president, said China's largest oil company was studying seven exploration blocks in Abu Dhabi, five onshore and two offshore. He hopes that a firm agreement will be signed by the third quarter of this year.

"For the drilling, I think maybe early next year," he said on the sidelines of an Opec conference in Vienna. "Abu Dhabi National Oil Company, they welcome the foreign investors to do risk exploration."

CNPC now has a team of 20 staff evaluating the technical and economic merits of the seven blocks, said Mr Wang, and will increase its presence in the emirate once drilling begins.

The work represents a significant step in Abu Dhabi's reorientation towards Asia when it comes to the production of its primary resource - a field that from 1939 was dominated by western powers.

Abu Dhabi has signed multiple production agreements with Japan, and more recently it has opened up its reserves to South Korea.

In March, Abu Dhabi awarded three exploration blocks covering half the emirate's land mass to Korea National Oil Corporation, the state producer.

The moves are driven by the movement in energy demand growth from the West to the East. China is today the world's biggest energy consumer.

The cooperation extends beyond oil production to technology exchange and education.

CNPC and Adnoc have begun sending young employees to each other's offices for training, and CNPC is to share its technologies used to coax oil from older fields.
"For the EOR [enhanced oil recovery] and IOR [improved oil recovery] technology, I think CNPC is first-class in the world," said Mr Wang. "We can be competitive with any other national oil company."

CNPC is also believed to be one of 10 companies formally invited to prequalify to bid for Abu Dhabi's prized onshore Abu Dhabi Company for Onshore Oil Operations concession, according to the trade publication International Oil Daily.

Since before the Second World War it has been operated by a consortium including BP, Total, ExxonMobil, Royal Dutch Shell and Portugal's Partex, and today it accounts for 1.4 million barrels, or half the emirate's daily output.


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