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Statoil eyes bid for UAE oil, gas concessions

Targets Iraqi crude output ahead of schedule.

November 1, 2010 10:15 by

Norwegian oil firm Statoil aims to bid for oil concessions in the United Arab Emirates due to expire in 2014 as it targets more business in the country’s energy industry, a senior executive told Reuters.

“We’re looking at gas and oil,” said Kjetil Tonstad, regional vice president for the Middle East at the company, said on Sunday on the sidelines of an industry conference in Abu Dhabi, capital of the UAE.

“There will be a new relicensing, that’s what we’re told, in 2014 when the old licences expire so we’re ready for that,” Tonstad said. “We don’t know the licencing strategy and I don’t know whether they have decided on that but that’s one target.”

The UAE has a unique system of concessions that allows foreign operators equity stakes in the OPEC producer’s oil and gas fields. Existing onshore oil concessions expire in 2014, raising questions about whether new players could be brought in and whether the system will survive unchanged.

“Another target is to be ready and bid and to negotiate for the gas fields when they’re available,” he said. “We’re waiting for the next move from the government. We’re ready to discuss all types of gas value chain projects,” he said.

Multinational companies hold large stakes in concessions that pump most of the oil and gas in the United Arab Emirates, the world’s third-largest oil exporter.

Asked whether Statoil was in talks with the UAE government on the $10 billion Shah gas project, Tonstad said: “We don’t have concrete talks with Adnoc on Shah gas but it’s an interesting field.”

The UAE is looking for an international partner for the $10 billion Shah gas project after U.S. major ConocoPhillips withdrew this year. Industry sources say Royal Dutch Shell was among the favourites.

“We’re highly competitive,” Tonstad said. “The competitive edge when it comes to oil fields has to do with recovery. On gas, we’re well positioned in Norway and in Azerbaijan and we know the gas market well,” he said.


Russia’s Lukoil and Statoil sealed the 20-year deal to develop the West Qurna Phase Two, a 12.9-billion-barrel oilfield in the south, in an auction in December, pledging to boost output to a plateau target of 1.8 million barrels per day (bpd).

The companies have a target of producing 120,000 barrels per day by 2013, Tonstad said, adding that they were on track to see that output level ahead of the schedule.

“It is challenging (in Iraq) but as of date we’re moving ahead…According to our contract, we have to deliver this (output) by late 2013, but we want to be ahead of that.”

Some industry experts believe problems with security, political instability and poor infrastructure mean plans by Iraq to expand its crude oil production dramatically over the next few years are overambitious.

“So far the political and security situation has not affected our progress on the field,” he said.

(Reporting by Humeyra Pamuk, Editing by Michael Shields)

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