Click here for the hard truth about the current job marketAugust 31, 2015 8:50
BP irritated over ‘spilled’ UAE relationship
Three other sources close to the matter said BP had been frozen out from the pre-qualification stage for the onshore fields in part due to "tensions" between the UAE and London.
September 1, 2012 9:43 by Reuters
BP losing the chance to bid to maintain its major role in the United Arab Emirates oil sector may signal not just irritation with the British flagship company, but a more serious rift caused by frustration with UK policies and even broadcasts from London.
Perceived BP haughtiness, anger over the West’s support for the Arab Spring and a growing sense that theUAE’s future lies in stronger ties with Asia, may have all driven the decision to block the oil major from bidding to run its biggest onshore oil fields, several well-placed sources in the UAE said.
British business has basked in the Gulf sun since a protection deal with local rulers in 1820. BP has played a role in the development of its oil from the start in the early 1930s.
But the West’s support for revolutions that toppled Arab leaders in 2011 and concern in Gulf states it is too welcoming of the Islamists who replaced them, has worn Britain’s centuries-old ties particularly thin, sources close to the matter say.
“There was some tension between the two governments,” an industry source in Abu Dhabi told Reuters, without elaborating.
“BP is looking for ways to mend this relationship,” he said, adding that attempts by the company to repair the rift with top UAE officials had been rebuffed.
Three other sources close to the matter said BP had been frozen out from the pre-qualification stage for the onshore fields in part due to “tensions” between the UAE and London.
UAE foreign ministry officials were not available for comment. A spokesman for Britain’s Foreign Office said only that he was aware of reports that BP has been sidelined.
The UAE is Britain’s largest export market in the Middle East with construction, defence and education among the key sectors, according to UK Trade & Investment. In 2011, civil exports came to around 4.7 billion British pounds.
A further factor cited by several sources in the UAE and London, is that a BBC Arabic report earlier this year on a government crackdown on Islamists in the UAE angered Abu Dhabi.
It contributed to a growing feeling among Gulf leaders that London and Washington were too welcoming of the Muslim Brotherhood which swept to power in Egypt.
Abu Dhabi Crown Prince Mohammed bin Zayed al-Nahayan last met British Prime Minister David Cameron inLondon in June.
It is not clear whether the BP role or BBC report was discussed or how the meeting went.
Sources in the region also said that BP’s assumption that it would automatically be invited to bid irritated some in the UAE elite.
Others have said BP executives may have angered one of the key decision makers by questioning the UAE’s plan to invite state-run Asian companies to take part, or the tight terms offered under the concessions.
In addition, BP may have been sidelined because it is no longer a top three global oil giant and was left out to make room for Asian companies, which buy nearly all the UAE’s oil.
UAE oil industry executives will be wary of shutting out all western oil company technology, decades of experience working on the fields that provide most of the country’s wealth, or alienating long-time western ally governments.
But they may have judged that they can afford to exclude BP without doing serious harm to either, with top U.S. oil giant Exxon and second placed Anglo-Dutch Shell still in the running along with France’s Total.
“The problem with BP is that they are living in the past…
other companies, Asian ones, are more competitive,” one well-connected source in Abu Dhabi said.
“The British media was also one of the reasons. They take a small thing and blow it out of proportion and take it as an excuse to write all the bad things about the country. They are very sensitive here about such things.”
A spokesman for BP declined to comment on the tender process, saying it was for Abu Dhabi to say why it had not been invited. The London-based oil company still enjoys good relations in its other UAE operations, he said. BP also has a stake in an offshore concession which expires in 2018.
“(BP’s exclusion) was unexpected, especially because of BP’s pioneering position in the region and given the vast interests and historical relationship,” said Kamel al-Harami, an independent oil analyst based in Kuwait.
“This is very strange to us. It’s unhealthy bearing in mind the ties and Abu Dhabi’s interest in investing in the UK.”
The concessions system in the UAE allows oil and gas producers to acquire equity hydrocarbons from the OPEC member in return for investing in projects.
State-run Abu Dhabi National Oil Co (ADNOC) currently partners with Royal Dutch Shell, Total, ExxonMobil, BPand Partex Oil and Gas, in the Abu Dhabi Company for Onshore Oil Operations (ADCO) concession.
The concession with capacity to produce between 1.4 and 1.5 million barrels per day (bpd) is due to expire in 2014 and ADNOC has invited the other western oil majors to continue to play a part in future.
State-run Korea National Oil Corp (KNOC) and China National Petroleum Corp (CNPC) are keen to increase their stakes in upstream projects in the Gulf to secure fuel for their booming economies and the UAE is thought to be equally keen to cement ties with its biggest customers.