THE PETROLEUM EXPERIENCE OF ABU DHABI Activities

THE PETROLEUM EXPERIENCE OF ABU DHABI Activities through Joint Ventures with Foreign Partners coopera other ADNOC activities are executed and performed in with foreign partners.

It was thought that through partnershi specialized foreign companies,  ADNOC would benefits advanced managerial and technological expertise marketing knowledge and outlets(when needed);  and the opportunity for company’s staff and employees to gain direct experience t working with the experienced personnel of a foreign partner In light of these considerations,  and the power granted ADNOC by its statutes t to”establish companies,  independently orin association with others,  or participate in companies already in existence ADNOC approached a number of highly specialized foreign companies in a variety of fields for the purpose of concluding appropriate joint venture arrangements.  A number of these joint ventures were concluded involving well-known companies including Shell(in GASCO),  BP(in ADGAS),  Total(in GASCO,  ADGAS and the Ruwais Fertilizer Project FERTIL)  and Mitsui(in ADGAS)  in the field of gas projects.  In the field of petroleum services they include Consolidated Construction Company(in the National Petroleum Construction Company-NPCC);  N.L.  Industries(in Abu Dhabi Drilling Chemicals and Products ADDCAP which has been recently merged with ADNOC’s wholly owned subsidiary,  Esnaad);  and more recently Borealis A/S(in Abu Dhabi Polymers Company Ltd.  Borouge)  In order for these joint ventures to achieve the basic objectives assigned to them,  ADNOC adopted a legal framework incorporating certain standard clauses and provisions These clauses and provisions dictate that a foreign company shares the total of the share capital of required for the project and provides a therefore becomes the joint company.

 The foreign companY a full partner,   project lawyer major the safeg percent case GAS join acco com  are hips and thus committed to its success However,  ADNOC always retains the majority of the equity in order to be able to play a major role in the decision-making process,  defining the policy of the project and establishing its plans and work programs to safeguard national interests.

ADNOC’s share is never less than 51 percent.  In the majority of cases its share is 60 percent,  and in some cases it is even more:  66.7 percent in FERTILE,  68 percent in GASCO and 75 percent in NPCC.  nty For the implementation and operation of projects,  the parties or jointly establish a limited liability company in Abu Dhabi in accordance with the laws of the country.  Since establishing companies and corporations in Abu Dhabi requires governmental authorization,  these companies are established by a decree.  The headquarters of the joint companies are situated in Abu Dhabi,  as nvolv are their records and accounts(unlike the old concessionary BP companies which used to run their operations from headquarters Fertilizer located abroad)  d of gas The fully paid-up share capital of the joint companies represent include between 20 and 25 percent of the total financial requirements of the etroleum project and the foreign partner subscribe to the share ADNOC capital on a pro rata basis.  To provide the balance of the total funds ou Dhabi needed,  the parties seek loans and provide guarantees corresponding to their shareholdings in the joint company.

  Sometimes the loan is provided by an Abu Dhabi governmental financial agency,  such as bsidiary the Abu Dhabi Investment Authority(ADIA),  in which case olymen ADNOC and the foreign partners provide guarantees proportionately.

In other cases the loan is secured through a consortium of banks,  often led by the National Bank of Abu Dhabi(NBAD)  The initial life of the company varies between seven and ten years for those dealing in petroleum services(renewable for a short period or periods,  of two years each)  thus allowing ADNOC to compans become the sole shareholder in a relatively short period .

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