Abu Dhabi National Oil Company

Abu Dhabi National Oil Company (ADNOC) is one of the ten largest oil companies in the world. The state-owned enterprise is engaged in all phases of the oil industry. It has a complex and intricate holding company structure involving equity links with large Western oil enterprises. Abu Dhabi is the largest of the seven states that formed the United Arab Emirates (UAE) in 1971, and it is the heart of the UAE's oil industry. ADNOC accounts for at least 90 percent of the 100 billion barrels of oil reserves in the United Arab Emirates. The company operates two refineries; three oil production companies; the Abu Dhabi Marine Oil Operating Co. (Adma-Opco) for offshore exploration and production; Abu Dhabi Gas Industries Ltd. (Gasco), a natural gas production company; two maritime transport companies; and many other subsidiaries in the oil, gas, and petrochemical industries. ADNOC also provides gas and electrical power for local consumption as well as desalinized water. Its subsidiary Adnoc-Fod markets and distributes gas and fuel throughout the UAE and operates a network of 200 gas stations. The holding company is divided into 14 directorates, which comprise specific industry areas within the holding company. The holding company's management is itself answerable to the United Arab Emirate's Supreme Petroleum Council, which guides the Emirate's petroleum policy. The head of the Supreme Petroleum Council is Khalifa Bin Zayed Al Nahyan, who is also crown prince of Abu Dhabi. Meanwhile, oil also had been discovered offshore by other companies. In 1951 Abu Dhabi had established that the concession granted to PDTC did not include the continental shelf belonging to the emirate. As a result, Abu Dhabi granted a concession to cover the offshore territory first to the International Marine Oil Company, which failed to achieve results, and then, in 1954, to Abu Dhabi Marine Areas Ltd. (ADMA), a new company two-thirds owned by British Petroleum (BP) and one-third by Compagnie Française des Pétroles. In 1959 ADMA's drilling barge struck oil at Umm Shaif, which is located 80 miles into the gulf near Das Island. In 1962 the first shipment of oil was loaded from Das Island. The onshore and offshore oil discoveries made Abu Dhabi a large-scale oil producer. Its oil production grew from zero in 1960 to 102.8 million barrels in 1965, and 253.7 million barrels in 1970. By that date its production was one of the largest in the Middle East, and about one-quarter of that of Kuwait. During the late 1960s there was growing resentment in Abu Dhabi, as elsewhere in the Middle East, of foreign ownership of oil resources, and especially the consortium system. The government concluded a 50-50 profit-sharing agreement with ADPC and ADMA in 1965 and 1966, respectively. In 1971 the government established the Abu Dhabi National Oil Company (ADNOC) as a wholly state-owned company. Following the formation of the Organization of Petroleum Exporting Countries (OPEC), Abu Dhabi followed the general policy of requesting participation in the foreign oil companies active in its territory. ADNOC acquired, effective January 1, 1973, 25 percent of the assets of ADPC and ADMA. The finalization of the ADMA participation agreement was complicated by BP's announcement in December 1972 of the sale of a 30 percent interest in ADMA to the Japan Oil Development Co. (Jadco), formed by a consortium of Japanese companies. The government withheld its approval of this deal until March 1973, when BP agreed to finance the construction of an ADNOC-owned refinery in Abu Dhabi. By a further agreement in December 1974, the ADNOC interest in the ADPC and ADMA concessions was raised to 60 percent. These two companies were reincorporated later as Abu Dhabi Company for Onshore Oil Operation and Abu Dhabi Marine Operating Company. Abu Dhabi was distinctive among the OPEC members in the gulf in retaining the former concessionaire companies as equity holders in the operating enterprises. It did not, a