Monday, August 07, 2006

Dubai to take control of offshore oil resources

Dubai to take control of offshore oil resources

NEW YORK (Reuters) - A unit of ConocoPhillips will end its role as operator of Dubai's offshore oil resources and the Emirate of Dubai will take over, marking the end of Dubai's first offshore oil concession, the government of Dubai and the U.S. oil major said on Sunday.

Starting April 2, Dubai Petroleum Establishment will be responsible for operating the oilfields, instead of ConocoPhillips unit Dubai Petroleum Co., and for all future business related to the production of oil and gas in Dubai.

Dubai oil will continue to be freely traded in the international oil market under contracts established by the government and by Dubai Petroleum Establishment, a new entity wholly owned by the government of Dubai.

More than forty years after the consortium was formed, "it is clear that production will now far outlast the period of the concession agreement, and all parties agree that it is appropriate to initiate a transition of operatorship to the government at this time and to begin a new era," said Abdulla Abdul Karim, Dubai government representative, in a statement.

Dubai Petroleum Co., wholly owned by ConocoPhillips , is part of the DPC/Dubai Marine Areas Limited consortium involving interests from Total SA of France; Repsol YPF of Spain; RWE Dea AG, a subsidiary of RWE AG of Germany; and Wintershall AG, a subsidiary of BASF AG of Germany.

No details were immediately available on the financial impact this decision will have on the non-Dubai partners. The consortium dates back to 1961.

"DPC will do its part to successfully facilitate the handover of the operations to the government," Bill Arnold, president, Dubai Petroleum Company, said in a statement.

A ConocoPhillips spokesman was not immediately available to comment.

ConocoPhillips shares closed trading at $68.52 on Friday.