Adnoc awards Russia’s Lukoil stake in Ghasha Concession

By DG Staff

ABU DHABI 16 October 2019: Abu Dhabi Government and Abu Dhabi National Oil Company (Adnoc), have awarded to a subsidiary of Russian Lukoil Oil Company, a five percent stake in Ghasha ultra-sour gas concession that comprises the Hail, Ghasha, Dalma and other offshore sour gas fields in the emirate.

Adnoc, Lukoil, and the Management Company of Russian Direct Investment Fund (RDIF), signed a framework agreement to explore potential future cooperation in relation to the Ghasha concession.

The concession award to Lukoil marks the first time that a Russian company joins an Adnoc concession and builds on the strong and strategic bilateral relations between the UAE and Russia. It also reaffirms the confidence of the international community in the UAE’s trusted and reliable business environment, said Wam.

In celebration of the friendly ties between both countries, the exchange of the signed concession and framework agreements took place today in Abu Dhabi.

The accession to the concession agreement was signed by Dr. Sultan bin Ahmed Al Jaber, UAE Minister of State and Adnoc Group CEO, and Vagit Alekperov, President of Lukoil. The framework agreement was signed by Dr. Al Jaber, Alekperov, and Kirill Dmitriev, CEO of RDIF.

$190m Investment

Under the terms of the concession award, Lukoil will invest an initial sum of Dh697.3 million (US$190 million) as a signing fee for the concession. Adnoc maintains a majority stake in the concession, which has as further concession holders Italy’s Eni, Germany’s Wintershall Dea, and Austria’s OMV.

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.

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.

Adnoc’s integrated gas strategy will see the development, in phases, of Abu Dhabi’s substantial gas reserves, as the UAE moves towards gas self-sufficiency and aims to transition from a net importer of gas to a potential net exporter of gas.

In addition to developing the Ghasha concession area, Adnoc plans to increase production from its Shah sour gas field from about 1.3 to 1.5 bscfd of natural gas. Adnoc also plans to tap gas from its gas caps, and unconventional gas reserves, as well as new natural gas accumulations, which will continue to be appraised and developed as the company pursues its exploration activities.

Lukoil is one of the largest publicly traded, vertically integrated oil and gas companies in the world, accounting for more than 2 percent of the world’s oil production, and around 1 percent of the world’s proved hydrocarbon reserves. In 2018, the company processed 152 billion cubic feet of gas (4.307 billion cubic metres) across its five gas processing plants in Russia.

Last year, bilateral relations between the UAE and Russia were strengthened when His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, and President Vladimir Putin of Russia, signed a Declaration of Strategic Partnership to cooperate in various sectors such as politics, security, economy, and culture. In 2018, bilateral trade between the UAE and Russia topped Dh11 billion ($3 billion), a 21 percent increase on the previous year.

Dubai Gazette