BP PLC (LON:BP.) is taking a bigger stake in the oil output of Abu Dhabi under a deal which will see the emirate become one of the oil giant’s biggest shareholders.
Under an agreement with the state-run Abu Dhabi National Oil Company (ADNOC), BP is taking a 10% stake in the Abu Dhabi Company for Onshore Petroleum Operations (ADCO), which operates the oil concession.
The ADCO concession, which includes the Bab, Bu Hasa, Shah and Asab fields, has resources of between 20-30 billion barrels of oil equivalent in Total over the term of the concession.
The fields produce 1.6 million barrels per day (bpd) and are expected to reach 1.8 million bpd from 2017.
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The Abu Dhabi deal comes as BP also unveiled plans today to inject almost US$1bln (£800mln) into a gas field off the coast of west Africa as it looks to battle low energy prices by expanding its output.
The Arabian Gulf deal will dramatically raise BP's share of oil and gas production in the emirate, from 95,000 barrels of oil a day to 260,000 barrels a day next year.
In return Abu Dhabi will receive shares representing a 2% stake in BP worth almost £2bn.
That would put Abu Dhabi among the FTSE 100-listed company's top 10 shareholders.
BP's chief executive Bob Dudley said: "This agreement will provide BP with long-term access to significant and competitive resources that we already understand very well.
"We will bring our people, cutting-edge technology and experience of managing mature giant fields around the world to help maximise recovery from these assets.”
Concession improved …
BP becomes the second Western oil major to renew a 40-year onshore concession in Abu Dhabi after almost two years of negotiations to improve terms to help operate the United Arab Emirates' biggest oilfields.
French giant Total was the first oil major to renew the concession, securing a 10% stake itself in January last year.
Other Western and Asian oil firms also bid for stakes after a deal with major oil companies in the concession first granted in the 1970s expired in January 2014.
BP and Total had both held 9.5% equity stakes in the ADCO concession since the 1970s.
Shell and Exxon were also partners in the old concession.
ADNOC said it "continues to look for partners to take up the remaining 12% stake of the 40% earmarked for foreign partners."
Analysts at French broker Exane BNP Paribas said: “The re-entry into the onshore ADCO concession shows a BP management team prepared to negotiate into improved terms.
“It also reflects CEO Bob Dudley’s increasing appetite to ‘execute’ since estimates for the remaining material Deepwater Horizon liabilities were provided for in July.”
In early morning trading, BP shares were 0.8%, or 4.05p higher at 493.75p.
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