Shaikh Mohammad Bin Rashid and Xi Jinping witness the signing of an MoU between Dr Sultan Ahmad Al Jaber, UAE Minister of State, Chairman of Masdar and CEO of ADNOC Group with a member of the Chinese delegation, at the Presidential Palace. Image Credit: WAM

Abu Dhabi: The UAE and China signed a strategic cooperation framework agreement on Friday to deepen energy partnership and explore mutually beneficial investment opportunities across the energy value chain to boost growth.

As part of the deal, Abu Dhabi National Oil Company (Adnoc) and China National Petroleum Corporation (CNPC) will explore upstream and downstream business opportunities. The two countries will also look at the possibility of storing Adnoc crude in China and selling of its products in the world’s largest energy market.

The signing of the agreement took place at the Presidential Palace in Abu Dhabi in the presence of His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, His Highness Shaikh Mohammad Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, and Deputy Supreme Commander of the UAE Armed Forces, and President Xi Jinping, of the Peoples Republic of China.

“China is the world’s largest growth market and we are keen to explore mutually beneficial opportunities, along the full hydrocarbon business value chain, in both the UAE and China,” Dr Sultan Ahmad Al Jaber, Adnoc Group CEO and UAE minister of state said.

“With CNPC, we will assess possible investment and partnership options that have the potential to create more value from our oil and gas resources and give greater access to the Chinese market, while also helping support China in meeting its expanding energy needs.”

He also said CNPC expressed a strong interest in working with the company on the range of co-investment and partnership opportunities especially refining and petrochemical operations.

Under the Strategic Cooperation Framework Agreement, Adnoc and CNPC will explore potential Chinese investment in a number of the planned downstream projects, including an aromatics plant, a mixed feed cracker and a new refinery.

The two companies will also discuss partnership opportunities in one, or more of CNPC’s downstream assets in China as part of Adnoc’s international growth strategy.

Technology Hub

In the upstream, Adnoc and CNPC will look at potential exploration and development prospects across Abu Dhabi, including the six geographical oil and gas blocks made available for competitive bidding earlier this year, as well as the possibility of establishing a Technology Hub linked to the Al Yasat concession, in which CNPC has a 40 per cent stake.

Discussions will also take place around the possibility of storing Adnoc crude oil in China, long term crude supply arrangements and a trading partnership for Adnoc’s refined and petrochemical products.

“This agreement marks an exciting new phase in the relationship between CNPC and Adnoc. It creates a clear framework for both parties to explore potential partnership opportunities that could deliver significant mutual benefits,” said Wang Yilin, Chairman of CNPC.

Over the past four years, the two firms have established several important energy partnerships, starting in 2014, when Adnoc and CNPC established the Al Yasat joint venture, which saw its first oil production earlier this year and its first oil shipment, to China, in May.

In February 2017, CNPC was awarded a minority stake in Abu Dhabi’s onshore concession and in March of this year, CNPC, through its majority-owned subsidiary PetroChina, was also granted a 10 per cent interest in each of the Umm Shaif and Nasr and Lower Zakum offshore concessions.

The signing of the new deal comes a day after Adnoc awarded contracts worth Dh5.88 billion ($1.6 billion) to an affiliate of China National Petroleum Corporation (CNPC) to conduct the world’s largest 3D onshore and offshore seismic survey to find new oil and gas reserves in the UAE.