Asian oil firms in limelight as Inpex bags concession deal
US, European firms set to lose out to less experienced Chinese, Indian, Korean rivals in the long run
Asian energy firms will play a greater role in exploration in the Gulf in the future after a Japanese firm won an important stake in Abu Dhabi concessions on Monday, experts said.
Inpex Corporation was awarded a 5 per cent stake in the development of 15 principal onshore oil fields in Abu Dhabi for 40 years starting from January 1, 2015. The value of the deal was expected to be worth $1.1 billion (Dh4.04 billion), according to reports.
The company is the first Asian firm to be awarded the prestigious contract. French energy major Total won a 10 per cent stake in January this year, while other companies are yet to be selected by the Abu Dhabi government.
In the fray
A number of international oil companies are in the fray including Royal Dutch Shell, British Petroleum, Occidental Petroleum, Stat Oil, Korea National Oil Corporation, China National Petroleum Corporation and ENI. Exxon Mobil, which was part of the old agreement, is not participating in the new bids.
The government of Abu Dhabi is awarding new contracts after decades-long concessions with Western oil majors ended in January last year. Francisco Quintana, head of economic research at Asiya Investments, expects more of these concessions to be allocated to Asian firms in the future at the expense of big American and European producers.
“Asia is where net demand will be coming from over the next decade. The region has savings and growing firms, backed by government money, in strategic sectors,” he said. “China, India [and] South Korea will play a greater role in exploration in the Gulf in the future.”
Richard Mallinson, an energy expert at London-based Energy Aspects, said Asian companies are certainly interested in projects in the Gulf because of expanding Asian demand.
“Producing nations would also like to develop these relationships, but they may have some concerns about the fact Asian firms still have less experience that western majors. We have seen this cause difficulties on several Iranian projects in recent years where the government has become frustrated about the progress being made by Chinese operators,” he said.
Tokyo-based Inpex has more than 70 active projects across 25 countries. Since 1966, Inpex has steadily expanded its business in Japan and in other parts of the world, from its core business areas in Australia and Indonesia to the Middle East, the Caspian Sea region, the Gulf of Mexico and North and South America.
The company is already involved in a number of projects in Abu Dhabi including the production of oil at the Umm Shaif, Lower Zakum, Umm Lulu, Nasr, Upper Zakum, Umm Al Dalkh, Satah and Abu Al Bu koosh oil fields.