Zhenhua Oil doubles crude offtake from UAE

According to Reuters, Zhenhua Oil of China, is set to double its oil offtake from Abu Dhabi National Oil Co to 200,000 barrels per day after taking on a new role leading development of one of the exporter's top oilfields.

In January, the smallest of China's state oil companies replaced French major TotalEnergies, following a bidding process to become asset leader for Bu Hasa, the largest onshore oilfield in the United Arab Emirates.

With that new role, in which Zhenhua is responsible for setting Bu Hasa's development plan and meeting production and cost targets, it also agreed a new annual deal to receive an additional 5 million tons, or 100,000 bpd, from ADNOC, the sources said.

The offtake deal, finalized around April, and Zhenhua's role in Bu Hasa have not been previously reported. It adds to Zhenhua's existing 100,000 bpd offtake agreement as an equity holder in ADNOC Onshore.

The total quantum of crude Zhenhua is contracted to receive from ADNOC will be ramped up to 200,000 bpd by around year-end.

In April, ADNOC set up an office in Beijing to expand investment opportunities with Chinese partners.

Established in 2003 under state defense conglomerate Norinco, Zhenhua specializes in oil and gas production outside China and has oil assets in Iraq, Pakistan and Kazakhstan.

In 2018, Zhenhua won a 4% stake in ADNOC's giant onshore concessions, securing a position alongside heavyweights including BP, TotalEnergies and CNPC.

With the increased offtake, Zhenhua is set to become a more active trader of Abu Dhabi's main Murban grade. The company, which runs trading desks in Beijing and Singapore, will place its first crude trader in Abu Dhabi this month, the sources added.