IOCs are eagerly waiting news about the remainder of the ADCO concessions, which expired at the end of 2013.

The 75-year Abu Dhabi Company for Petroleum Oil Operations (ADCO) concession agreement ended in 2013, leaving the doors open to IOCs to bid for a new 40-year concession. After a first wave of bids, 22% is still left to be attributed. After the new deal, which came into effect on January 1, 2015, Total has the largest stake, at 10%, as well as being announced asset leader in Bu Hasa and Bab Southeast, while Japan's Inpex and South Korea's GS Energy won 5% and 3%, respectively.

The concessions come under ADCO and, in the former deal, Total, Shell, BP, and ExxonMobil all had a 9.5% share, with Partex taking the remaining 2%. This makes up the 40% that is open to bidding, with ADCO's owner, ADNOC, hold the remaining 60%. A share of the production in 15 oil fields, producing 1.6mbpd, is at stake for the would-be suitors of the remaining percentage, with this production capacity rising to 1.8mbpd by 2017.

There are also an additional 11 oil fields that can be developed under the concession. This represents more than half the current daily production of the UAE, although this will level out due to capacity rising to 3.5mbpd, while the government wants offshore production to contribute 50%, after $25 billion of investments over the next five years. The concessions work differently to production sharing agreements (PSAs), which are the modus operandi for many deals globally. PSAs bear a heavier burden on the IOC, as all of the exploration risk falls upon them, rather than the state.

A concession means that the IOC will pay a royalty to the state, in return for a broader amount of control over production and mineral reserves. Total is reported to have paid $2.2 billion to ADNOC for the stake in the ADCO concessions, Inpex forked out $1.1 billion, and GS Energy paid $676 million for its 3% share.
The concessions, literally and figuratively, come at a price as ADNOC expects to achieve 70% oil recovery rates, far exceeding the global average of 40%. The UAE owns a total of 97.8 billion barrels of proven oil reserves, 4% of the global total, making it owner of the seventh largest oil reserves.

The move caused some surprises as industry stalwarts Royal Dutch Shell and ExxonMobil have yet to renew their stakes, with it now being impossible for them to regain the 9.5% they once had. Other giants were also, at least for the time being, overlooked—a list that included ENI, Statoil, Occidental, Korea National Oil Corporation (KNOC), and China National Petroleum Corporation (CNPC). The new partners represent the shifts in global trading and reflect the rise of the far-Eastern power bloc, which did not exist when the first concession was agreed.

Japan, the world's third largest importer, annually buys 30% of the UAE's entire oil output, or 20% of Japan's oil consumption, which stands at 4.3mbpd. ADNOC awarded the new concession agreements on the basis of which bid proved the best technical and commercial offer. It, therefore, looks as though ADNOC wants to find the companies that can achieve the 70% recovery target, while simultaneously finding markets for the oil.
Upon closer inspection, the move toward the East could have been anticipated. Inpex, a subsidiary of Japan Oil Development Company (JODCO), owns a 12% stake in the ADMA OPCO concession, which will run through to 2041 after a 15-year extension. Similarly, in 2013, CNPC and ADNOC signed a strategic cooperation agreement to develop Abu Dhabi's oil and gas resources, while KNOC shares a 40% stake with GS Energy in a 30-year agreement for two onshore concession blocks and one offshore, operated through Al Dhafra Petroleum. South Korea also bought 12% of UAE crude oil in 2014. BP submitted a renewed bid for a stake in the concession, just after ADIPEC 2015, although it remains unclear for how much and whether the bid was received positively.