Adnoc awards Dh5.5B concession to Cepsa

Dr Sultan Al Jaber and Pedro Miró singed the agreement.

The Abu Dhabi National Oil Company (Adnoc) signed on Sunday a Dh5.5 billion offshore concession agreement with Cepsa, which wholly-owned by Abu Dhabi's Mubadala Investment Company.
As per the agreement, Cepsa, a Spanish integrated oil and gas company, was awarded a 20 per cent stake in Abu Dhabi's offshore Sarb and Umm Lulu concession.
The new concession is the second awarded by Adnoc this month. On February 10, Adnoc awarded a 10 per cent interest in its Lower Zakum offshore concession to a consortium of Indian companies led by ONGC Videsh in a Dh2.2 billion deal that marked the first hydrocarbon rights agreement between the emirate and a country that is forecast to become the world's fastest-growing oil consumer.
The choice of Cepsa, which is wholly-owned by Abu Dhabi's Mubadala Investment Company and operates across the entire oil and gas value chain, underpins Adnoc's strategy to maximise returns from its resources, expand its downstream business, and retain value for the UAE.
Adnoc said the new partnership would enhance cooperation across the value chain, in line with its 2030 and downstream growth strategies.
The concession area is made up of two main fields under development, Umm Lulu, which is part of the former Adma offshore concession, and Sarb, as well as two smaller fields, Bin Nasher and Al Bateel. The Adma concession has been split into three new concessions to maximise commercial value, broaden Adnoc's partner base, expand technical expertise, and enable greater market access.
Cepsa contributed a participation fee of Dh5.5 billion ($1.5 billion) to enter the concession, which also takes into account previous Adnoc investments in the concession area. Adnoc retains a majority 60 per cent stake in the concession that will be operated by Adnoc Offshore, a subsidiary of Adnoc.
Dr Sultan bin Ahmad Sultan Al Jaber, Adnoc Group chief executive officer, and Pedro Miró, vice-chairman and CEO of Cepsa, singed the agreement, which has a term of 40 years and an effective date of March 9, 2018.
"This long-term agreement is a milestone in the development of Abu Dhabi's integrated oil and gas sector and in the delivery of Adnoc's 2030 smart growth strategy. This partnership ensures we continue to maximise value from our hydrocarbon resources, in line with the leadership's directives, by capturing that value and financial return here in the UAE," said Dr Al Jaber.
He said the agreement also reflects Adnoc's new partnership approach, as the company expands and diversifies partner base across its integrated value chain.
"Reflecting our strategic approach, we are also working with Cepsa to explore expansion opportunities in our downstream business, in the UAE and overseas, that will deliver competitive returns and long term growth opportunities for both parties, and for the UAE."
Cepsa, which has been operating in the energy sector since 1929, has businesses in over 20 countries across five continents. Its operations span exploration, production, refining, distribution and marketing, chemicals, gas and power, trading, bunkering and renewable energy sources.
Miro said the concession agreement marks an important moment for Cepsa and its close relationship with Adnoc.
"It will add substantial reserves, in a concession with relatively low production cost, to our portfolio, and will enable us to make considerable strides towards achieving our objectives, as set out in our 2030 Strategic Plan".
According to Cepsa, the offshore concession agreement strengthens its energy model and long-term strategy, and is in line with the company's forecasts as outlined in its Energy Outlook 2030 report for world demand for oil growth in the coming years.
The agreement increases Cepsa's presence in the UAE, a strategic country for the company where it has operated in both exploration and production and bunker activities since 2013.
The concession award is the first to be announced for the second of three new offshore concession areas, which have been created from the former Adma offshore concession.
In support of its expanded 2030 strategy, Adnoc plans to grow its crude refining capacity by 60 per cent and more than triple its petrochemical production, to 14.4 mtpa by 2025, through a staged expansion plan aimed at initially optimising its existing assets to grow and diversify its products portfolio, as it delivers its strategic imperatives of a more valuable upstream, more profitable downstream and an economic and sustainable supply of gas.
Adnoc said it is finalisng concession agreements with other potential partners for the remaining stakes in the Sarb and Umm Lulu, the Lower Zakum and the Umm Shaif and Nasr concessions.
- issacjohn@khaleejtimes.com