Boost for energy security: ONGC acquires stake in key UAE oil field

Prime Minister Narendra Modi shakes talks with the Crown Prince of Abu Dhabi Deputy Supreme Commander of U.A.E. Armed Forces General Sheikh Mohammed Bin Zayed Al Nahyan at Presidential Palace in Abu Dhabi

Prime Minister Narendra Modi shakes talks with the Crown Prince of Abu Dhabi Deputy Supreme Commander of U.A.E. Armed Forces General Sheikh Mohammed Bin Zayed Al Nahyan at Presidential Palace in Abu Dhabi

A consortium led by India's Oil and Natural Gas Corporation (ONGC) is set to sign an agreement with Abu Dhabi National Oil Company (Adnoc) for a strategic stake in its offshore oil concession, said a report, citing senior sources.

OVL, along with Indian Oil Corp. and Bharat PetroResources, were awarded a 10% stake in the new Lower Zakum concession, after agreeing to pay Dirham 2.2 billion ($599 million).

ONGC Videsh Ltd and its partners have acquired a 10 per cent stake in a large offshore oilfield in Abu Dhabi for Dollars 600 million, the first time any Indian company has set foot in the oil-rich UAE.

The group headed by ONGC will be the first party to secure a stake in the offshore concession. This historic agreement will lead to further opportunities for Indian oil and gas companies to participate in the UAE's energy sector. Adnoc offshore fields now produce about 1.4 million barrels a day, it said.

"ADNOC is finalising the potential partners for the remaining 30 per cent of the available 40 per cent stake in the Lower Zakum Concession earmarked for worldwide oil and gas companies", the statement said.

Existing shareholders in ADMA-OPCO are BP plc with 14.67 per cent, Total SA with 13.33 per cent and Japan Oil Development Co with 12 per cent. The others cover the Umm Shaif and Nasr fields, and another for the Umm Lulu and Satah al-Razboot fields. All three will be operated by ADNOC Offshore, a new subsidiary, and ADNOC maintains the controlling 60% stakes. This is while it attempts to boost total production capacity to 3.5 million b/d by the end of 2018, as well as drastically raising its downstream capacity, doubling gasoline production and tripling petrochemicals output by 2025.

Indian energy demand is forecast, by the International Energy Agency (IEA), to grow by more than any other country in the period to 2040, propelled by an economy that will grow to more than five-times its current size and by population growth that will make it the world's most populous country. Adnoc has said it received more than 10 bids from companies seeking to work on the fields. "The agreement reflects the vision of the Honourable Prime Minister of India towards strengthening hydrocarbon linkages with the UAE on a win-win basis". Many UAE oil watchers had expected an announcement from the visits.

ADNOC, had in August a year ago, said that 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. "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". This 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 global investments, particularly focused on downstream opportunities.

Alongside the concession award, ADNOC and the Indian Strategic Petroleum Reserves Ltd (ISPRL) exchanged agreements, today, to implement the strategic crude oil storage facility, in the southern Indian city of Mangalore. This will not only help the UAE expand its sales in the South Asian nation, but also gives Indian refiners quick access to cargoes which could potentially lower their costs.

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