BP strikes $2.2 billion deal for oil fields in UAE

British oil giant BP inked a $2.2 billion deal Saturday, restoring its share of an onshore oil block in the port city of Abu Dhabi, United Arab Emirates. The deal calls for BP to give the Emirates company stock worth 2 percent of the oil giant's overall value.

The unusual arrangement saves BP from doling out cash and gives the UAE capital a stake in the firm that first arrived there in 1939 when the country was still a British protectorate.

The agreement will also make the UAE one of BP's largest shareholders, as oil prices have rebounded from a 13-year-low in February.

"This agreement will provide BP with long-term access to significant and competitive resources that we already understand very well," BP CEO Bob Dudley said in a statement.

After years of negotiations, Saturday's deal took market watchers by surprise.

BP had a 9.5-percent interest in the onshore concession that expired near the end of 2014. The company's overall crude production dropped 2.4 percent that year - something it blamed partly on losing the Abu Dhabi concession.

The new deal includes the UAE's Bab, Bu Hasa, Shah and Asab fields, which will produce between 20 billion to 30 billion barrels of oil equivalent over the 40-year term of the concession, according to BP.

BP to get 10% of production

The British oil giant will be entitled to 10 percent of its anticipated production of 1.66 million barrels of oil per day under the deal.

BP also operates in separate, offshore Abu Dhabi oil concessions.

Sultan Ahmed al-Jaber, director of the state-run Abu Dhabi National Oil Co. and Emirati Minister of State, said in a joint statement that BP "has long been a strategic partner to Abu Dhabi."

"This agreement marks a milestone in our efforts to forge new partnership models that bring technology, expertise and financing aimed at maximizing the value of our resources and supporting the transfer of knowledge," al-Jaber said.

BP said Saturday that Abu Dhabi continues to look for foreign partners to take on a remaining 12-percent stake.

The UAE's state-run WAM news agency put the stock deal's value at $2.22 billion. BP refused to offer a specific figure.

The agreement will catapult Abu Dhabi into the top tier of BP stockholders, putting it ahead of Kuwaiti and Norwegian sovereign wealth funds, each of which hold over 1.7 percent of the company.

The deal comes as oil prices, which fell from highs of over $100 a barrel in mid-2014 to $30 this year, have clawed their way back to $50.

bik/kl (AP, AFP)