ADNOC awards offshore concession stake to Cepsa for $1.5 bln

Abu Dhabi National Oil Company (ADNOC) said Sunday it signed a 40-year concession deal with Spain’s Cepsa worth AED 5.5 billion ($1.5 billion) for a 20 per cent stake in its offshore SARB and Umm Lulu concessions.

Capsa’s participation payment also takes into account previous ADNOC investments in the concession area made up of two main fields, in which ADNOC retains a majority 60 per cent stake. The remaining 20 per cent stake in the concession is yet to be announced.

Umm Lulu and SARB is one part of the ADMA offshore concession expiring in March, which was recently split into three new concessions to maximise commercial value, broaden ADNOC’s partner base, expand technical expertise, and enable greater market access. The other two are Lower Zakum and Umm Saif & Nasr.

ADNOC last week awarded a 10 per cent stake in Lower Zakum to an Indian consortium, led by ONGC Videsh.

Cepsa, a Spanish integrated oil and gas company is wholly-owned by Abu Dhabi’s Mubadala Investment Company and operates across the entire oil and gas value chain. The deal underpins ADNOC’s strategy to maximise returns from its resources, expand its downstream business, and retain value for the UAE.

The agreement, which has an effective date of March 9, 2018, was signed by Dr Sultan Ahmed Al Jaber, ADNOC Group chief executive officer, and Pedro Miró, vice chairman and CEO of Cepsa.

H.E. Dr Al Jaber said: “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.

“The agreement also reflects ADNOC’s new partnership approach, as we expand and diversify our partner base across ADNOC’s 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. It is the world’s largest producer of Linear Alkyl Benzene (LAB) and also the leading producer of cumene and the second in phenol and acetone, thanks to its seven chemical plants, in Europe, Asia and the Americas. In 2016 it produced 35.4 million barrels of oil, distilled 158.7 million barrels of crude oil and sold 28.3 million tons of petroleum products.

Miro said: “This concession agreement marks an important moment for Cepsa and our close relationship with ADNOC, with whom we are working with on a number of projects in the upstream, downstream and petrochemical sectors. 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”.

In November 2017, ADNOC and Cepsa signed a framework agreement to evaluate a new world-scale Linear Alkyl Benzene complex in Ruwais, Abu Dhabi. LAB is the most common raw material in the manufacture of biodegradable household and industrial detergents. It is also used in house cleaners, fabric softeners, and soap bars.