The company’s six storage facilities are in Fujairah, media reports said. The lease will be for a period of six months, with the potential to renew for another six months. It is reported that these facilities have already received initial cargoes.

The company was established in 2013 and has plans in the pipeline to expand its storage capacity for crude and oil products to nearly 3.5 million cubic metres from the current 1 million cubic metres.

Global lockdowns have affected oil production and demand in many ways. The pandemic has reduced global oil demand for crude and other byproducts such as gasoline, diesel, and jet fuel by nearly 30 percent, media reports said.

More recently, the drop in global oil demand is expected to hit a 9-year low, according to the International Energy Agency. It is reported that the US will play a significant role in oil production cuts in 2020. Shell’s chief executive Ben van Beurden, told the media, “We are looking at a major demand destruction that we don’t even know that will come back. So the oil price may come back. But if the volumes are significantly lower, we still have a major dislocation, of course, in our own cash wheel.”

Oil majors including Shell, BP, Total, and Eni have committed to achieve net-zero emissions by 2050, media reports said.

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Under the terms of the agreement, both companies have mutually agreed to exchange knowledge, best practices and advanced technologies in ultra-sour gas development, local media reported. 

They will also explore opportunities in LNG purchase and sales, while simultaneously exchanging specific knowledge and expertise in these markets. Additionally, Adnoc and Cnooc will assess other opportunities for partnerships and co-investments in the LNG sector. 

Dr Sultan Ahmed Al Jaber, UAE Minister of State and Adnoc Group CEO, told the media, “This far-reaching framework agreement underpins the close economic ties between the UAE and China, and offers exciting new growth opportunities as well as mutually beneficial investment initiatives between Adnoc and Cnooc, while enabling wider potential for strategic collaboration in both the upstream and downstream.”

The UAE represents 4 percent of the world’s crude production, which is largely produced from fields owned and operated by Adnoc in Abu Dhabi. 

Before entering China through Cnooc, Adnoc, in the last two years, has broadened the scope for its strategic partnership and joint investment across several areas of value chain. Adnoc aims to increase its oil production capacity to 5 million barrels per day by 2030.

Half of China’s oil imports are produced from the Middle East, where there are significant activities carried out in hydrocarbon production and exploration. Yang Hua, chairman of Cnooc, said, “The agreement will further deepen China’s energy cooperation with countries along the Belt and Road route, building a closer community of shared future in the energy sector.”

Last month, the state of Maharashtra in India identified a new site for Adnoc-Aramco’s joint development of a $44 billion oil refinery which will be located at Raigad district. The new joint venture called Ratnagiri Refinery is expected to produce 1.2 million barrels per day. Aramco and Adnoc will own 50 percent stake in the refinery, while the remaining stake will be acquired by Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation.

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