Chinese oil company Chenhua Oil is set to double its oil purchases from the Abu Dhabi National Oil Company (ADNOC) to 200,000 barrels per day. This increase follows the company’s new role in leading the development of one of the UAE’s largest oil fields.
In January, Chenhua, which is the smallest of China’s state-owned oil enterprises, replaced French company TotalEnergies after a bidding process to take charge of the Bu Hasa oil field, the UAE’s largest onshore oil field.
As part of its new responsibilities, Chenhua is tasked with developing a strategic plan for the Bu Hasa field and achieving production and cost targets. The company has also agreed to a new annual deal to receive an additional five million tons, or 100,000 barrels per day, from ADNOC. This deal, finalized around April, had not been previously disclosed.
This new agreement supplements an existing deal in which Chenhua already receives 100,000 barrels per day as a stakeholder in onshore ADNOC assets. According to sources, the total amount of crude oil contracted by Chenhua from ADNOC is expected to rise to 200,000 barrels per day by the end of the year.
In April, ADNOC opened an office in Beijing to expand investment opportunities with Chinese partners. Established in 2003 under the Norinco defense conglomerate, Chenhua specializes in oil and gas operations outside of China and holds assets in Iraq, Pakistan, and Kazakhstan. In 2018, the company secured a four percent share in ADNOC’s major onshore concessions, placing it alongside major firms like BP, TotalEnergies, and China National Petroleum Corporation (CNPC).
As demand grows, Chenhua is expected to become more active in trading Murban crude, Abu Dhabi’s primary oil. Sources indicate that the company, which operates trading offices in Beijing and Singapore, will establish its first crude trading office in Abu Dhabi this month.