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ADNOC awards 5pct Ghasha stake to LUKOIL for $190 mln

Oct 16, 2019
4 min read
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ADNOC has awarded LUKOIL’s unit a 5 per cent stake in Gasha ultra-sour gas concession for an initial investment of AED 697.3 million ($190 million), which includes Hail, Gasha, Dalma and other offshore sour gas fields in Abu Dhabi.

Additionally, ADNOC, Russia’s LUKOIL and Russian Direct Investment Fund (RDIF) managers signed a framework agreement to explore potential future cooperation in the Gasha concession, ADNOC said in a statement.

 The concession award to LUKOIL marks the first time that a Russian company joins an ADNOC concession. The signing was attended by His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces and Russian President Vladimir Putin during the latter’s state visit to the UAE.

Under the terms of the concession award, LUKOIL will invest an initial sum of AED 697.3 million ($190 million) as a signing fee for the concession, ADNOC said, who will maintains a majority stake in the concession, which has as further concession holders Italy’s Eni, Germany’s Wintershall Dea, and Austria’s OMV.

H.E. Dr. Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO said: “We are very pleased to partner with LUKOIL on this crucial project, which also marks the first time that we partner with a Russian energy company across our full value chain. We are also pleased to have agreed a strategic framework agreement with LUKOIL and RDIF that builds on the award and offers potential for collaboration in relation to the Ghasha concession. The concession award, as well as the framework agreement, reflect the strong and strategic bilateral ties between the UAE and Russia and highlight the important role of energy cooperation in strengthening the relations between our two countries.

“LUKOIL joins our other value-add partners on the Ghasha concession, which is integral to our objective of enabling gas self-sufficiency for the UAE. The transaction is consistent with ADNOC’s targeted approach to engage with strategic partners that contribute the right combination of best-in-class expertise and advanced technology, market access or capital to unlock maximum value from Abu Dhabi’s resources for our mutual benefit, while delivering the greatest possible returns to the UAE.”

The Ghasha mega-project is expected to produce over 1.5 billion standard cubic feet per day (bscfd) of natural gas by around 2025. The natural gas will be enough to provide electricity to more than two million homes. Also, more than 120,000 barrels per day of oil and high-value condensates are expected to be produced.

Vagit Alekperov, President of PJSC LUKOIL said: “The development of the Ghasha gas project is the first LUKOIL project in the UAE and we are pleased to partner with ADNOC and cooperate with RDIF in this project. LUKOIL has extensive experience in offshore fields, both independently and in consortia with other major international companies. We are glad to enter the project in the UAE with such a significant resource base and with such experienced partners. Joining this project is fully consistent with our strategy.”

Over the Ghasha concession’s lifetime, ADNOC expects substantial benefits to flow back into the UAE economy under its In-Country Value program, which is intended to stimulate commercial opportunities for local businesses, catalyze socio-economic development and create additional employment opportunities for UAE nationals.

Kirill Dmitriev, CEO RDIF said: “The large-scale project to develop the Ghasha Concession opens up great investment opportunities for RDIF and LUKOIL. The agreement with ADNOC reflects a high level of energy cooperation with the UAE and confidence in the expertise of partners from the Russian Federation to help develop one of the major natural resources projects in the Middle East.”

 

Image credit: WAM

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