Chinese State Oil Firm Doubles UAE Crude Offtake

Chinese state-controlled company Zhenhua Oil is doubling its offtake of crude from Abu Dhabi’s state oil and gas firm after taking over as lead developer of the UAE’s biggest onshore oilfield, industry sources in China told Reuters on Thursday.

Zhenhua Oil will double the volumes of crude it receives from Abu Dhabi’s ADNOC from 100,000 barrels per day (bpd) to 200,000 bpd.

Earlier this year, the Chinese firm took over from French supermajor TotalEnergies as asset leader for Bu Hasa, ADNOC’s largest onshore asset, located 200 kilometers (124 miles) south of Abu Dhabi city, according to Reuters’ sources.

Bu Hasa has a production capacity of 650,000 bpd and is also one of ADNOC’s oldest fields, which has been producing oil since 1965.

In 2018, ADNOC granted Zhenhua Oil a 4% stake in the onshore concessions, with which the Chinese firm became a minority shareholder in ADNOC’s onshore production together with BP, TotalEnergies, and China’s CNPC.

Now the increase in offtake from ADNOC will allow Zhenhua Oil to be a more active trader of the Murban crude from the United Arab Emirates.

In May this year, Zhenhua Oil successfully completed its first spot physical crude delivery via the Dubai Window platform, operated by S&P Global Platts. The delivered crude involved Zhenhua’s equity share of Murban crude from the United Arab Emirates.

The delivered grade, ADNOC’s flagship Murban crude, was sold directly to a PetroChina refinery. Known for its high API gravity, low sulfur content, and strong refining flexibility, Murban is a preferred choice among refiners across Asia-Pacific and Europe.

“This marks a major milestone for Zhenhua—its first physical crude delivery via the Platts mechanism—signifying a strategic breakthrough in its international crude trading journey,” the company said.

“By linking upstream production directly with end-user refineries, the company has further strengthened its position in the Middle East’s key oil-producing region.”

By Charles Kennedy for Oilprice.com

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