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Abu Dhabi, UAEThursday 20 September 2018

Total explores downstream ventures with Adnoc after winning two stakes in offshore fields 

Total paid $1.45bn to join fellow European major Eni in the Lower Zakum and Umm Shaif and Nasr concessions

Patrick Pouyanne, chairman and CEO of Total, with Dr Sultan Al Jaber, Minister of State and CEO of Abu Dhabi National Oil Company, after signing an offshore concession agreement on March 18. 2018. Courtesy Adnoc
Patrick Pouyanne, chairman and CEO of Total, with Dr Sultan Al Jaber, Minister of State and CEO of Abu Dhabi National Oil Company, after signing an offshore concession agreement on March 18. 2018. Courtesy Adnoc

Total is in talks with Abu Dhabi National Oil Company (Adnoc) to develop downstream capabilities in the UAE and abroad, after the French oil major picked up two stakes worth US$1.45 billion (Dh5.33bn) in offshore concessions in the emirate on Sunday.

“They are [Adnoc] willing to expand in the downstream, and we are having discussions to see what we can achieve. It has to be a win-win for all companies,” Total chief executive Patrick Pouyanne told The National.

The French oil company won a 20 per cent interest in the Umm Shaif and Nasr concession and a 5 per cent stake in Lower Zakum, where it joins fellow European oil company Eni, Japan’s Inpex as well as an Indian consortium led by ONGC Videsh.

Abu Dhabi’s state oil firm is set to announce its downstream strategy soon, as it plans to spend up to $109bn over the next five years in projects including expansion of refining and petrochemicals in the UAE and abroad. Adnoc has targeted doubling of refining and tripling its petchems capacities respectively by 2025, in order to increase its margins from the sale of higher-value products.

Total, which is a partner on the $1.7bn petchems facility on the US Gulf Coast with Abu Dhabi state fund Mubadala Investment Company’s affiliates Nova Chemicals and Borealis, did not rule out further expansion of petchems capabilities abroad.

“The new ambition of Adnoc is to be more on the integrated model and we’ll study this not only in Abu Dhabi, but abroad as well,” said Mr Pouyanne.

On Sunday, the Total chief signed agreements with Adnoc to advance offshore partnerships in oil and gas.

Total paid a participating fee of $1.15bn to enter Umm Shaif and Nasr as well as $300 million for Lower Zakum. The Abu Dhabi firm last week awarded 10 per cent and 5 per cent stakes to Eni in the former and latter concession areas respectively.

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Read more:

Nova Chemicals and Borealis finalise $1.7 billion Texas chemicals joint venture with Total

Eni awarded stakes in two Abu Dhabi offshore concessions in $875m deal with Adnoc

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Total will work with its partners to raise production capacities at Lower Zakum to 450,000 barrels per day and Umm Shaif and Nasr to 460,000 bpd and 500 million cubic feet of gas per day in “10 years”, Mr Pouyanne said. He noted that current production levels at Lower Zakum averaged 300,000 bpd.

The twin concessions will be operated by Adnoc Offshore on behalf of all partners. Adnoc will retain a 60 per cent stake across the various split concessions, with the remainder shared between various partners.

“Total brings deep knowledge and understanding of Abu Dhabi's offshore oil and gasfields, as well as specialist expertise and technology that will help accelerate the development of the giant Umm Shaif gas cap," Dr Sultan Al Jaber, Adnoc group chief executive said in a statement on Sunday.

"Adnoc has recently seen encouraging results from the first gas cap production pilot well at Umm Shaif."

Adnoc is yet to announce partners for the remaining 10 per cent stake in Lower Zakum, 10 per cent for Umm Shaif and Nasr and 20 per cent of Sarb and Umm Lulu, of which another 20 per cent was awarded to Mubadala-owned Cepsa last month.

Last week, Adnoc announced awards totalling $875m to Eni in Umm Shaif and Nasr as well as Lower Zakum, marking the Italian major’s entry into the UAE oil and gas sector.

Abu Dhabi’s recent partners on the various offshore concessions up for renewal this month have so far been from Asia, reflecting the company’s pivot to secure market access in the East.

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