CNPC, ADNOC Close To Signing Exploration, Refining Deal

China National Petroleum Corporation (CNPC) and the Abu Dhabi National Oil Company (ADNOC) are expected to sign as early as this month a preliminary deal to invest in oil and gas exploration and refining, Reuters reported on Friday, quoting sources in the know, including CNPC officials.

CNPC’s international investment unit, CNPC International, is taking the lead in talks with ADNOC, and the deal is expected to be a broad-based cooperation agreement to invest in the upstream and downstream segments, a Chinese oil official told Reuters. The signing is expected to take place in the United Arab Emirates (UAE) later this month during a high-level Chinese visit to the Middle Eastern oil-producing country.

“We see a trend of some Gulf countries such as Abu Dhabi, Qatar and Saudi Arabia moving to diversify away from their oil and gas reliant economy, by divesting some of those assets to free up capital for other sectors,” a CNPC official told Reuters.

In recent months, ADNOC has said that it would aim to double its refining capacity in a major push to expand its downstream operations. Abu Dhabi and its state oil firm ADNOC also launched in April the emirate’s first-ever competitive oil and gas bid round, inviting bids for six oil and gas blocks as part of its strategy to expand strategic partnerships in all business areas. Companies have until October to bid on two offshore and four onshore blocks.

Related: Permian Bottlenecks Come At The Worst Moment

ADNOC has also been looking to expand and diversify its partnership base in joint projects and signing concession deals for producing fields under its strategy to boost strategic partnerships with international oil companies.

Regarding CNPC, the Abu Dhabi oil company awarded last year an 8-percent interest in Abu Dhabi’s onshore oil concession to the Chinese major. Earlier this year, ADNOC also awarded CNPC stakes in two of Abu Dhabi’s offshore concession areas—a 10-percent interest in the Umm Shaif and Nasr concession and a 10-percent stake in the Lower Zakum concession.

By Tsvetana Paraskova for Oilprice.com

More Top Reds From Oilprice.com:

• Mexico’s New Government Won’t Upend Energy Reforms
• Oil Prices Drop On US-China Trade War, Saudi Production Boost
• Do Trump’s Tweets Point To Another Oil Crisis?