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Abu Dhabi: The expiry of oil and gas concessions in the UAE by 2013 is not deterring American companies from investing in the sector, a US trade official told Gulf News.
The 75-year oil concessions provided for foreign oil companies in Abu Dhabi will expire in 2013, and are considered among the least attractive terms worldwide according to industry experts, offering only one dollar per barrel - a very tight margin.
Nevertheless, all foreign companies are not willing to leave, as they can still book the reserves, which is very important for them.
"The major US energy companies that we work with do not seem concerned at all about the expiry of concessions because the partnership they have had with Abu Dhabi National Oil Company (Adnoc) and its affiliates has been exemplary for the entire time they have worked here - and some of these companies have been here for more than 20 years," said Christian Reed, the counselor for commercial affairs at US Commercial Services.
Strong partnership
"The partnership is excellent, and that is the key to it. Partnership rather than buyer and seller," Reed said.
Many companies are trying to get better terms when the concessions are renewed, while Adnoc is trying to stimulate more competition by inviting newcomers, although neither foreign oil companies nor Adnoc have revealed anything in this respect yet, an industry expert said.
"Most of the activity of the US companies here is in re-developing the existing fields to the fullest cap-acity so that the very maximum amount of oil and gas can be produced, while maintaining the fields' viability in the future, because the government here is extremely concerned, with maximising output without depleting the fields, to ensure they use the resources wisely and to leave this on for generations," Reed added.
This year, there is a record 104 participants from the UAE, at the Offshore Technology Conference (OTC), the largest oil and gas show in the world, which takes place in May every year at Houston, Texas, compared to 84 participants last year.
"We are very happy because we have the largest delegation that has ever been recruited to this event from the Middle East, with about 104 delegates from the UAE, mostly from Abu Dhabi but some from Dubai as well," Reed said.
One of the participants this year is ADIPEC, which will have a booth at OTC to promote the show among US companies to come to Abu Dhabi and participate in the largest oil and gas show in the Middle East.
Free trade pact
The counsellor denied that the delay in signing a free trade agreement (FTA) between the UAE and the US is hindering the flow of business and trade between the two countries. He also said pegging the dirham to the dollar gives US exports a competitive advantage, relative to Europe.
"There is not an FTA but that does not prevent us from having excellent economic and commercial and political relationships all along.
"Even without the FTA more and more US companies come every year, they find successful UAE business partners, and they make a commitment to the region, and we try to match up the American companies with US partners," he said.
"The peg to the US dollar means that the US exports for the UAE stay the same in terms of price. With other currencies that are rising, European exports are getting much more expensive, so it makes American exports even more attractive, because their prices are stable compared to the rising prices elsewhere," he added.
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