Sources: South Korea's GS Energy Poised to Win Abu Dhabi Oil Stake

(Bloomberg) -- GS Energy Corp. is poised to win a stake in Abu Dhabi's largest onshore oil-field concession, joining France’s Total SA and Japan’s Inpex Corp. in a $22 billion venture, according to three people with knowledge of the matter.

The energy unit of South Korea's GS Holdings Corp. is set to sign a contract for the concession this week with state-owned Abu Dhabi National Oil Co., said the people, who asked not to be identified because the information is confidential. Spokesmen for GS Energy and Adnoc declined to comment.

State-owned Adnoc is seeking overseas companies to join it in a new 40-year partnership to pump oil from the largest onshore producing deposits in the United Arab Emirates. The awards give companies from Asia, to which Abu Dhabi sells most of its crude, direct stakes in the emirate’s biggest producing fields. Inpex won a 5 percent stake last month.

"It is possible that the awarding of concessions is to some degree looking to match the geography of the client base," Harry Tchilinguirian, the head of commodity markets strategy at BNP Paribas SA, said from London. "In the end, it is down to the terms of agreement and whether they are mutually agreeable to both parties."

GS Energy bid for as much as 5 percent of the venture and said it would pay Adnoc as much as $1.1 billion in a signing bonus, according to a regulatory filing the company made on March 11. That investment would be in line with the $2.2 billion signing bonus that Total paid Adnoc for a 10 percent stake awarded in January, according to two people familiar with the situation who spoke in February. Adnoc and its partners will split investment in the fields and receive crude according to their respective stakes, the people said.

Boosting Capacity

Abu Dhabi, the U.A.E.'s largest emirate, is boosting crude- production capacity amid a global glut that cut prices about 50 percent last year. The Organization of Petroleum Exporting Countries, of which the U.A.E. is the third-biggest producer, plans to meet June 5 to assess the market after leaving its output ceiling unchanged when it met in November.

Onshore production capacity will rise to 1.8 million barrels a day in 2017 compared with 1.6 million currently, Adnoc said previously. Abu Dhabi plans to boost its total crude production capacity to 3.5 million barrels a day in 2017 from about 3 million barrels a day now.


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