Abu Dhabi National Oil Co. (ADNOC) announced on Tuesday its plans to consolidate the operations of two of its offshore oil companies into a new entity.
The move follows the company’s restructuring plans and is a result of the downfall in crude oil prices.
“The existing concession rights of our partners in the concessions currently operated by Adma-Opco and Zadco will not be affected by the consolidation,” ADNOC’s CEO and the UAE’s Minister of State, Sultan Al Jaber, said.
Offshore Merger at ADNOC to Fight Oil Crisis
The United Arab Emirates (UAE) producer took the decision to combine Abu Dhabi Marine Operating Co. (Adma-Opco) and Zakum Development Co. (Zadco).
“With Adnoc’s recent focus on driving efficiency, performance and profitability—without compromising HSE and asset integrity—the consolidation of Adma-Opco and Zadco is a logical step to help achieve these objectives,” the CEO explained.
The process should be completed by early 2018 and will be overseen by a committee with members from Adnoc and concession-holders including Total, BP and ExxonMobil.
Dr. Sultan Al Jaber: Consolidation of ADMA-OPCO & ZADCO will facilitate enhanced operations & provide strategic benefits for future growth pic.twitter.com/CUXHCyK2z6
— AdnocGroup (@AdnocGroup) October 4, 2016
“Looking ahead, ADNOC will continue to review and consider all options, and pursue partners for concessions expiring in 2018,” the CEO told media sources.
According to the statement by ADNOC, the company will work with its partners to “maximise” oil output and the new entity is due to “yield significant financial and operational benefits”.
UAE Hit by Crude Oil Prices
ADNOC owns 60% of Adma-Opco, while the rest is shared between BP, Japan Oil Development Co. (Jodco) and Total. In Zadco, the company’s partners include ExxonMobil and Jodco.
Abu Dhabi holds approximately 6% of the world’s oil reserves. With the decline in crude oil prices, the country is controlling its spending, resulting in cost cuts and a slowdown in economic growth.
However, the UAE continues to announce plans to increase its crude production capacity to 3.5 million barrels per day (bpd).
In August, the country was pumping 3.03 million bpd.