ConocoPhillips nears Abu Dhabi deal

Financial Times: ConocoPhillips nears Abu Dhabi deal

By Sheila McNulty in Houston
Published: April 23 2008 03:00 | Last updated: April 23 2008 03:00

ConocoPhillips expects to announce in the “next month or two” that it will be working on Abu Dhabi National Oil Company’s $10bn sour gas project.

“We’re working very hard on this project,” Jim Mulva, Conoco’s chief executive,told the Financial Times. “Hopefully there will be an announcement that we will be working together in the next month or two.”

The contract has been under negotiations for months, with Royal Dutch Shell and Occidental Petroleum reported as front contenders at the end of last year. However, in recent months Occidental has been advised it is not a finalist.

Winning the gas contract would be a boon at a time when international oil companies, such as Conoco, are having difficulties accessing new resources amid growing nationalism in oil-rich countries.

High oil prices have made the project economic and United Arab Emirates is looking to international oil companies to help, given the experience they have with such difficult projects.

Much of the gas will be used to meet the increasing needs of the United Arab Emirates amid its rapid economic development.

The country is estimated to have more than 200 trillion cubic feet of gas reserves, making it the world’s fifth-largest holder of gas reserves. Securing this contract would put Conoco in a strong position to win others in the UAE.

Mr Mulva’s comments are the furthest Conoco has gone to confirm still officially unconfirmed reports from the UAE that it was going to get the contract.

And while Mr Mulva would not say specifically that Conoco had won the contract, his comments reflect unconfirmed reports by the UAE that the company was in the final running.

“We expect to be working with Adnoc,” Mr Mulva said. “It’s an important project for Adnoc, and it’s an important project for ourselves.”

Separately, Mr Mulva would not give specific details about talks in another part of the world, Venezuela, where it took a $4.5bn writeoff last year after the government seized control of its assets in a nationalisation of the energy sector. The company is attempting to recover those losses.

“We’re trying to determine the value of the investment made,” Mr Mulva said. Once Conoco and Caracas agree to the value, he said, they can determine how the country could reimburse Conoco.

“I’m always an optimist,” Mr Mulva said. “I would like it sorted in 2008.”

During the interim, Conoco continues to buy oil from Venezuela, where Mr Mulva routinely meets officials in what he describes as a “very cordial relationship”.

Copyright The Financial Times Limited 2008