Abu Dhabi National Oil Co’s (ADNOC) awarded the first stake in its 40-year offshore oil concession to a consortium led by India’s Oil and Natural Gas Corp (ONGC), boosting its energy ties with the world’s third-biggest consumer.
ADNOC signed an agreement on Saturday with the ONGC Videsh-led consortium giving the group a 10 percent stake in the new Lower Zakum offshore concession, for a participation fee of 2.2 billion dirhams (US$600 million), ADNOC said in a statement.
ONGC Videsh is the foreign investment arm of ONGC. Other members of the consortium are Indian Oil Corp and Bharat Petro Resources Ltd, an upstream arm of refiner Bharat Petroleum Corp. ADNOC Offshore, the group’s unit will operate the concession on behalf of the concession partners.
Effective March 9, the agreement has a term of 40 years, ADNOC said.
The contract signing in Abu Dhabi was attended by Abu Dhabi Crown Prince Sheikh Mohamed bin Zayed al-Nahyan and Indian Prime Minister Narendra Modi. It is the first time for Indian oil companies to take part in an Abu Dhabi oil and gas concession.
“The mutually beneficial partnership will help India meet its growing demand for energy and refined products, create opportunities for ADNOC to increase its market share in a key growth market, and build a solid foundation as ADNOC explores potential international investments, particularly focused on downstream opportunities,” ADNOC’s chief executive Dr Sultan al-Jaber said in the statement.
In August, ADNOC said it would split its ADMA-OPCO offshore concession into three areas - Lower Zakum, Umm Shaif and Nasr, and Sateh Al Razboot and Umm Lulu - with new terms to unlock greater value and increase opportunities for partnerships.
The existing ADMA-OPCO concession, in which ADNOC has a 60 percent stake that it will retain, produces around 700,000 barrels per day (bpd) of oil and is projected to have a capacity of about 1.0 million bpd by 2021. Existing shareholders in ADMA-OPCO are BP plc with 14.67 percent, Total SA with 13.33 percent and Japan Oil Development Co with 12 percent.
ADNOC said it was still finalising opportunities, with potential partners, for the remaining 30 percent of the available 40 percent stake in the Lower Zakum offshore concession available for foreign oil and gas companies.
“I am happy to note that we have progressed from a buyer-seller relationship to an era of mutual investments in the oil and gas sector,” Prime Minister Modi said.
On Saturday, ADNOC and the Indian Strategic Petroleum Reserves agreed to implement the strategic crude oil storage facility, following a deal ADNOC signed last year to store about 6 million barrels of oil at India’s Mangalore storage site, taking up about half of its capacity.