Adnoc to partner with Spanish firm Cepsa after awarding it 20% stake in offshore oil concessions

19/02/2018 07:31 AST

Abu Dhabi National Oil Company is eyeing further partnerships with Spanish energy firm Cepsa after awarding it a 20 per cent stake in offshore concession areas for Dh5.5bn ($1.5bn) as the state-owned firm seeks to bring in new partners.

Cepsa, which is owned by Abu Dhabi fund Mubadala Investment Company, signed a 40-year concession agreement to operate oil fields SARB and Umm Lulu ahead of the pact's expiry in March, Adnoc said on Sunday.

"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," said Dr Sultan Al Jaber, UAE state minister and chief executive officer of Adnoc.

The agreement with Spanish firm Cepsa comes a week after Adnoc awarded a 10 per cent stake to an Indian consortium led by the international arm of ONGC to operate the new Lower Zakum offshore concession.

The award to Cepsa will be dated from 9 March 2018 and follows Adnoc's announcement last year to split its Adma-Opco concession - now known as Adnoc Offshore - into three smaller parts operated in partnership with international oil and gas companies, with the state firm retaining a 60 per cent stake.

Adnoc is "finalising concession agreements with other potential partners" for remaining stakes in the three offshore parts: SARB, and Umm Lulu; Lower Zakum; Umm Sharif and Nasr.

Among the stakes that are up for fresh agreements are 30 per cent of Lower Zakum, another 20 per cent of SARB and Umm Lulu as well as a 40 per cent stake in Umm Shaif and Nasr fields.

Abu Dhabi is looking to raise production capacity from the SARB and Umm Lulu oil fields to 215,00 barrels per day (bpd), Adnoc said, without providing a timeline for this target.

The Umm Shaif and Nasr fields have a targeted capacity of 460,000 bpd and 500 million cubic feet a day of gas . Last year Adnoc signed an agreement with Exxon Mobil's Abu Dhabi subsidiary and Japan's Inpex Corporation to boost production capacity from the offshore Upper Zakum oil field to a million bpd by 2024.

As part of the state oil firm's pivot to bringing in new partners , Adnoc is engaging more Asian firms across its various concessions and has plans underway to collaborate on downstream integration as well.

In November, Cepsa said it was in talks with Adnoc to build a linear alkyl benzene complex at Ruwais in the emirate to be integrated with Adnoc's refinery facility.

Also known as detergent alkylate, LAB is the most common chemical compound used in the manufacturing of biodegradable household and industrial agents.

The facility at Ruwais is expected to have a planned annual production capacity of 150,000 tonnes and is expected to start up in 2021, with exports aimed at Indian and South East Asian markets.

The companies are expected to commence basic engineering of the proposed chemical facility this year. The Spanish firm also operates the Hail and Mubarraz field in partnership with Japanese firm Cosmo Oil. The fields started production at around 20,000 bpd in November.

In an interview with The National last year, Cepsa chief executive officer Pedro Miro said he expected production to reach 40,000 bpd "sometime in the beginning of 2019".

The National