|In this picture provided by WAM the state-run news agency of the United Arab Emirates, Sultan Ahmed Al Jaber, right, ADNOC Group Chief Executive Officer, and member of the Supreme Petroleum Council of the Emirate of Abu Dhabi, and Bob Dudley, BP Group Chief Executive, pose for a picture following a deal in Abu Dhabi, Saturday, Dec. 17, 2016. Oil giant BP PLC has agreed to an onshore oil deal with the Mideast emirate of Abu Dhabi worth $2.22 billion following years of negotiations. (WAM via AP)|
DUBAI, United Arab Emirates (AP) — BP PLC signed a $2.22-billion deal Saturday restoring its share of an onshore oil block in Abu Dhabi by agreeing to give the emirate stock in the company worth 2 percent of the oil giant's overall value.
The unique agreement spares BP of paying out cash and gives the capital of the United Arab Emirates' stake in a company that first arrived there in 1939, back when the country was still a British protectorate of sheikhdoms.
The deal also makes the UAE one of the biggest single stockholders in BP as oil prices have climbed out of a 13-year low in February.
"This agreement will provide BP with long-term access to significant and competitive resources that we already understand very well," BP CEO Bob Dudley said in a statement.
News of the deal came without warning Saturday after years of negotiations between London-based BP and Abu Dhabi, the capital of the seven sheikhdoms that form the UAE.
BP had held a 9.5-percent interest in the onshore concession that expired in late 2014. That year, the company's overall crude production dropped 2.4 percent, something it blamed in part on losing the Abu Dhabi concession.
BP said Saturday's deal includes the UAE's Bab, Bu Hasa, Shah and Asab fields, which will produce between 20 billion to 30 billion barrels of oil equivalent over the 40-year term of the concession. BP will be entitled to 10 percent of its anticipated production of 1.66 million barrels of oil per day under the deal.
BP also operates in separate, offshore Abu Dhabi oil concessions.
Sultan Ahmed al-Jaber, director of the state-run Abu Dhabi National Oil Co. and Emirati Minister of State, said in statement that BP "has long been a strategic partner to Abu Dhabi."
"This agreement marks a milestone in our efforts to forge new partnership models that bring technology, expertise and financing aimed at maximizing the value of our resources and supporting the transfer of knowledge," al-Jaber said.
But those negotiations apparently were fierce and took time. France's Total SA earlier reportedly agreed to pay $2.2 billion for a 10-percent concession for 40 years and $2.85 for every barrel of oil sold.
Japan's INPEX Corp. holds a 5-percent stake while GS Energy of South Korea holds 3 percent in the onshore concession operated by the Abu Dhabi Company for Onshore Petroleum Operations, also known as ADCO.
BP said Saturday that Abu Dhabi continues to look for foreign partners to take on a remaining 12-percent stake.
The UAE's state-run WAM news agency put the stock deal's value at $2.22 billion. BP declined to offer a specific figure.
The agreement will catapult Abu Dhabi into the top tier of BP stockholders, putting it ahead of Kuwait and Norway's sovereign wealth funds, which each hold over 1.7 percent of the company.
The deal comes as oil prices, which fell from highs of over $100 a barrel in mid-2014 to $30 this year, have clawed their way back to $50.
Part of that is due to OPEC members, including the UAE, agreeing to pare 1.2 million barrels a day of their production, while nonmembers pledged an addition daily 558,000-barrel cut. It's the first joint production cut in 15 years.