Conoco wins deal to develop gas.
(Image: conoco-platform.jpg )
CONOCOPHILLIPS has signed a multibillion-dollar natural-gas development deal with Abu Dhabi National Oil Co, adding another major project to its global portfolio.
The deal a" which involves an estimated $10 billion to $12 billion investment by the two companies, according to people familiar with the lengthy negotiations a" is another step in the transformation of Houston-based ConocoPhillips into a global energy power. The company didn't disclose terms of the transaction. The Abu Dhabi project is the third major deal that ConocoPhillips chief executive James Mulva has landed in the Middle East in the past five years. He also brought the company back to Libya after an absence of roughly three decades, and he engineered its successful entry into Russia; both nations have abundant oil and gas reserves, but they have been tough places for Western companies to do business. ConocoPhillips, which was formed in 2002 by the merger of Phillips and Conoco, has entered the ranks of what are known in the energy industry as super majors a" global companies with both exploration and refining operations. "By Jim Mulva's effort, ConocoPhillips has become the sixth super major," says Robinson West, chairman of oil consulting firm PFC Energy. "The notion that Phillips would be the progenitor of a super major was laughable 10 years ago." Mulva's moves also have catapulted ConocoPhillips into the top tier of global oil companies. In the 1998 Petroleum Intelligence rankings of major oil companies, Conoco was 26th and Phillips 34th. In the most recent ranking, ConocoPhillips was 8th. West says the key to the company's success has been Mulva's ability to do deals in nations that are becoming increasingly closed to Western investment. "What I hear from foreign governments is that Jim isn't high maintenance; CEOs of multihundred-billion-dollar companies tend to be high maintenance," West says. In the latest deal, ConocoPhillips outmanoeuvered Royal Dutch Shell and Occidental Petroleum for the contract to help develop the Shah natural-gas field in Abu Dhabi. The field has large reserves of what is known as sour gas, which is highly corrosive and requires special facilities, equipment and handling to process. The Middle East energy market is controlled by state-run oil companies and, with a few exceptions, international companies aren't allowed to acquire a stake in the region's oil and gas deposits. But the deal with the Abu Dhabi oil company, is expected to allow ConocoPhillips to book new reserves from Shah, in line with similar agreements between Adnoc and other international oil companies like ExxonMobil and BP, an Abu Dhabi-based oil official says. The project should go a long way toward meeting Abu Dhabi's surging demand for natural gas for its expanding petrochemical industry, new gas-fired electrical stations and desalination plants. Despite their vast oil reserves, the countries of the Gulf are struggling to meet their own domestic energy needs, and they are becoming increasingly dependent on gas-burning power plants. "This deal is something that Abu Dhabi absolutely needs," says Dalton Garis, associate professor at Abu Dhabi's Petroleum Institute. The emirate faces a shortage of natural gas this year, he says.
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