Dubai to take control of offshore oil
DUBAI (Reuters) -- Dubai has joined those oil producers tightening their grip on energy assets, with a deal to take control of its offshore oilfields.
The Gulf Arab emirate will take over the fields from a unit of U.S. ConocoPhillips next year, a joint statement said.
A Dubai official said the deal was necessary as production, although dwindling to around 100,000 barrels per day, will outlast the original partnership deal agreed to 45 years ago. Output peaked above 400,000 bpd in 1991.
But the declining flow belies Dubai crude's significance to world markets as it is still used as a benchmark for more than 12 million bpd of Middle East crude oil exports to Asia.
"DPC will do its part to successfully facilitate the handover of the operations to the government," Bill Arnold, head of Dubai Petroleum Company (DPC), said in the joint statement.
Starting April 2, 2007, Dubai Petroleum Establishment (DPE) will be responsible for operating the oilfields, instead of ConocoPhillips unit DPC, and for all future business related to the production of oil and gas in Dubai.
The move marks the end of Dubai's first offshore oil concession and the start of a new phase in which it will directly control its offshore resources, the statement said.
A ConocoPhillips (Charts) spokesman was not immediately available to comment. An official at the United Arab Emirates' oil ministry declined comment. Dubai is part of OPEC-member the UAE.
"The natural resources of Dubai have always been in national ownership and will continue to do so," a DPE spokesman said.
"New plans will be formulated and assessed to prepare the assets for further development," the spokesman added, but said it was too early to discuss the firm's targets.
High prices and increasingly scarce crude oil finds have emboldened some governments to take more control over their oil industry or extract more revenue from foreign operators.
Leading Gulf producers Saudi Arabia and Kuwait nationalized their sectors in the 1970s and show few signs of opening the doors.
But oil industry sources were reluctant to tie the move too closely to a resurgence of politically motivated producer power, seen as a resources nationalism wave from Bolivia to Russia.
"I don't think it is about a nationalization trend," Dalton Garis of the UAE-based Petroleum Institute told Reuters. "In fact everything Dubai does has been about liberalizing its markets."
"It could be they want to see the fields developed more and thus move to a service contract that allows them far more control," he added.
Dubai is the Gulf's commercial and tourism hub. Oil income accounts for less than 10 percent of its gross domestic product.
Dubai oil will continue to be freely traded in the international market under contracts established by the government and by Dubai Petroleum Establishment, a new entity wholly owned by the government of Dubai, the statement said.
Dubai Petroleum Co., wholly owned by ConocoPhillips, is part of the DPC/Dubai Marine Areas Limited consortium involving interests from Total SA of France; Repsol of Spain; RWE Dea AG, a subsidiary of RWE AG of Germany; and Wintershall AG, a subsidiary of BASF AG of Germany.
No details were immediately available on the financial impact this decision will have on the non-Dubai partners.
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