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OVL, partners acquire 10 per cent stake in Abu Dhabi oilfield

Press Trust of India  |  Abu Dhabi/New Delhi 

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

The contract for the oilfield in Lower Zakum Concession, as part of India's efforts to ensure the country's security, was signed in yesterday evening in the presence of and Crown Prince Sheikh al-Nahyan.

While addressing a large gathering of the Indian community in today, Modi referred to the major deal and said it was the "beginning of a bright dimension in our partnership".

OVL, the overseas arm of state-owned and Natural Gas Corp (ONGC), Indian Corp (IOC) and a unit of Bharat Petroleum Corp Ltd (BPCL), paid a signing amount of USD 600 million for a 10 per cent stake in Abu Dhabi National Co's (ADNOC) 40-year Lower Zakum Concession, Offshore Abu Dhabi.

"The current production of this field is about 400,000 barrels of oil per day (20 million tonnes per annum) and Indian consortium's annual share shall be about 2 million tonnes," the OVL said in a press statement.

"This is the first Indian investment in upstream oil sector of the United Arab Emirates, transforming the traditional buyer-seller relationship to a long-term investor relationship," a statement issued by the here said.

The field is to achieve plateau target of 450,000 barrels of oil per day by 2025.

The concession, which has a term of 40 years with an effective date of March 9, 2018, was signed by and Sultan Ahmed Al Jaber.

"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 international oil and gas companies," the statement said.

The deal "will help meet its growing demand for 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," said.

Shanker hoped that the historic agreement will lead to further opportunities for Indian companies to participate in the UAE's sector.

"The agreement reflects the vision of the of towards strengthening hydrocarbon linkages with the UAE on a win-win basis," he said.

ADNOC said the pact supports company's strategy to maximise economic value and recovery from its offshore resources. "This is an attractive and strategic agreement for both parties that will deliver competitive returns and long term growth opportunities."

ADNOC had in August last year said that it would split its ADMA-OPCO offshore concession into three areas - Lower Zakum, Umm Shaif and Nasr, and Sateh and Umm Lulu - with new terms to unlock greater value and increase opportunities for partnerships.

"The present transaction marks entry of OVL in highly prospective UAE region and is consistent with its stated strategic objective of adding high quality producing assets to its existing exploration and production portfolio," the statement said.

OVL is India's largest international oil and gas company, having 39 projects in 18 countries, including Azerbaijan, Bangladesh, Brazil, Colombia, Kazakhstan, Mozambique, Myanmar, Russia, South Sudan, Sudan, Namibia, Venezuela, and

It currently produces about 277,000 barrels of oil and per day and has total (2P) of about 704 million tonnes of oil equivalent as on April 1, 2017.

ADNOC will have 60 per cent stake in the existing ADMA- OPCO concession, which produces around 700,000 barrels per day of oil and is projected to reach about 1 million barrels per day 2021.

Existing shareholders in ADMA-OPCO are with 14.67 per cent, with 13.33 per cent and Japan Oil Development Co with 12 per cent.

Alongside the concession award, ADNOC and the Indian Strategic Petroleum Reserves Ltd (ISPRL) exchanged agreements, to implement the strategic storage facility in Mangalore.

The partnership with ISPRL, an Indian government- owned company mandated to store for strategic needs, covers the storage of 5.86 million barrels of ADNOC in underground facilities, at the facility.

The will help ensure Indias energy security, as well as enable ADNOC to efficiently and competitively meet market demand in and across the fast developing south east Asian economies.

The decision to establish the strategic reserve was announced in January 2017 during a visit to India by Sheikh

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Sun, February 11 2018. 14:25 IST