Adnoc and Austria's OMV sign $1.5bn offshore agreement

The deals conclude Adnoc Offshore's round of concession stake awards, raising the total value close to $8bn

An Austrian energy group OMV refinery in Schwechat, Austria. The firm has signed an agreement with Adnoc. Heinz-Peter Bader / Reuters

Abu Dhabi National Oil Company finalised the sale of two stakes worth $1.5 billion for blocks offshore the emirate to Austria’s OMV, pushing the value of total concession awards to around $8bn this year, the company said in a statement.

“OMV’s strong track record in deploying advanced technologies to cost-effectively increase recovery rates from mature fields will help enable Adnoc to continue to be a reliable supplier of oil for decades to come,” said Dr Sultan Al Jaber, Adnoc Group chief executive and UAE State Minister.

OMV, which has Abu Dhabi wealth fund Mubadala Investment Company as a  shareholder snapped up the last of the offshore concession stakes that Adnoc opened up to international oil companies, while retaining a 60 per cent interest.

The UAE, accounts for around 6 per cent of global oil production, much of it through its state producer Adnoc.

The Abu Dhabi oil firm has as part of a drive to become an integrated oil company consolidated its branding, as well as invited companies, particularly from top consumers such as China and India to produce oil and gas offshore. Adnoc offered up to 40 per cent stakes in concessions managed by the erstwhile Adma-Opco entity, now renamed Adnoc Offshore.

OMV, which derives much of its 311,000 barrels per day production from Central Eastern Europe wants to add lower-cost barrels of Middle East crude to diversify its global interests.

The Austrian firm acquired 20 per cent interest in the offshore fields and associated infrastructure of Satah Al Razboot, along with satellite fields Bin Nasher and Al Bateel as well as Umm Lulu.

Mubadala, the Abu Dhabi strategic firm with more than $200bn in assets, owns around 25 per cent of OMV.

The agreement with OMV, following the lead of similar pacts with Italian major Eni, France's Total, Japan's Inpex, China National Petroleum Corporation, an Indian consortium led by ONGC Videsh as well as Spain's Cepsa - another Mubadala entity - has allowed the UAE to secure markets for 40 per cent of its oil for four decades, Adnoc said in the statement.

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OMV, Austria’s largest industrial firm, will also explore potential opportunities downstream with Adnoc, the companies said.

Through its stake in Austrian firm Borealis, which is also owned by Mubadala, OMV is a partner in Abu Dhabi's largest chemical facility Borouge, adjacent to Adnoc's refinery at Ruwais. OMV owns 36 per cent of Borealis, with the remainder owned by Abu Dhabi's International Petroleum Investment Company, which has since merged with Mubadala.

The companies have also collaborated overseas, through a joint venture with Total and Mubadala-owned Canadian firm Nova Chemicals in a $1.7bn petrochemicals facility in Texas, capitalising on a boom in cheap US shale gas.

Adnoc, which plans to double refining and triple its petrochemical capacities by 2025 is set to announce its downstream strategy in a gathering of global oil and gas executives in Abu Dhabi on May 13. Other upstream concession awardees such as Total and Cepsa are also said to be in discussions to develop downstream projects with Adnoc. both in Abu Dhabi and abroad.

The UAE has earmarked around $109bn to be spent on developing and acquiring downstream assets in the domestic market and abroad, besides sour gas development over a five-year period.

The Abu Dhabi major also launched its first ever licensing round for six blocks onshore and offshore the emirate this month. A roadshow for the bidding round was set to have begun in April, with successful firms to be awarded exploration rights to develop and produce any discoveries in collaboration with Adnoc.