India Wins Piece of Abu Dhabi Oil With Stake in $6 Billion Field


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India secured a share in Abu Dhabi’s oil production for the first time after agreeing to pay $600 million for a tenth of one of the emirate’s biggest offshore deposits.

State-owned Oil and Natural Gas Corp. and other Indian companies agreed to a 40-year contract for rights to pump crude from the Lower Zakum field in partnership with Abu Dhabi National Oil Co., according to an Adnoc statement. Adnoc signed the deal during a visit of Indian Prime Minister Narendra Modi to the capital of the United Arab Emirates on Saturday.

Abu Dhabi, which holds most of the U.A.E.’s oil reserves, is looking for new partners at its offshore fields as the production concession for some deposits expires next month. Partners in Abu Dhabi’s fields generally receive an amount of crude oil commensurate with their stakes in return for tax and royalty payments and investment to boost output. 

Abu Dhabi Offshore

Investors in oil concession that expires next month

Source: Company information

The Indian companies will pay 2.2. billion dirhams ($600 million) to Abu Dhabi for their stake in the field, according to the statement, putting the overall value of the deposit at $6 billion. Adnoc, which retains 60 percent holdings in its fields, aims to award rights for another 30 percent of the Lower Zakum field as well as to two other offshore crude blocks.

The Indian consortium is made up of ONGC’s wholly owned subsidiary ONGC Videsh, the Indian Oil Corp., and Bharat PetroResources, which is a 100 percent subsidiary of Bharat Petroleum Corp. Ltd, according to the Adnoc statement. The concession will be operated by Adnoc Offshore, a subsidiary of Adnoc, on behalf of all concession partners, it said.

Expanded production from its offshore reservoirs are part of Adnoc’s plans to raise its onshore and offshore production capacity to 3.5 million barrels a day by the end of 2018, according to the statement. Adnoc offshore fields currently produce about 1.4 million barrels a day, it said.

The current production of the Lower Zakum field is about 400,000 barrels a day and the plan is to increase the plateau target to 450,000 barrels a day by 2025, according to a statement from ONGC Videsh.

The Indian win gives the country, one of the biggest buyers of U.A.E. crude, a direct stake in Middle East barrels. Adnoc will be able to tap demand in the world’s second-most populous nation and expands its portfolio of partners. Adnoc has said it received more than 10 bids from companies seeking to work on the fields.

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