Monday 30, April 2018 by Nabilah Annuar

ADNOC and OMV sign concession agreement

Concession entry valued at AED 5.5 billion. Series of offshore concession agreements generate AED 29.1 billion in fees and secure markets for 40 per cent of Abu Dhabi’s oil for next 40 years.

This agreement completes the round of offshore concession awards, which has seen ADNOC bring on board with many more partners who bring value to the table, in terms of market access, capital, technology and expertise. Collectively the offshore agreements, concluded since the start of the year, have contributed AED 29.1 billion ($ 7.92 billion) in participation fees and secured markets for 40 per cent of the UAE’s oil for the next 40 years. Over the life of the concessions many more millions of dirhams will be generated as oil production increases and new markets are secured.
The agreement has a term of 40 years and was effective from 9 March 2018, was signed by HE Dr Sultan Ahmed Al Jaber, ADNOC Group Chief Executive Officer and Dr Rainer Seele, Chief Executive Officer of OMV.
HH Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, and Deputy Supreme Commander of the United Arab Emirates Armed Forces, and HE Sebastian Kurz, Chancellor of Austria, witnessed the signing of an agreement awarding OMV a 20 per cent stake in Abu Dhabi’s SARB and Umm Lulu offshore concession.
The concession area comprises two producing fields, Umm Lulu, part of the former ADMA–OPCO offshore concession, and SARB. The ADMA-OPCO concession has been divided into three separate concessions in order to maximise commercial value, broaden ADNOC’s partner base, expand technical expertise, and enable greater market access.
 
OMV is an Austrian integrated oil and gas company part-owned by a subsidiary of Abu Dhabi’s Mubadala Investment Company.
 
OMV, Austria’s largest listed industrial company, joins Spanish integrated oil and gas company CEPSA (20 per cent), which is wholly owned by the Mubadala Investment Company, as a shareholder in the offshore concession. The SARB and Umm Lulu concession award to OMV strengthens ADNOC’s strategy to maximise returns from its resources, expand its downstream business, and retain value for the UAE.
 
OMV contributed a participation fee of AED 5.5 billion ($1.5 billion) to enter the concession, which also takes account of previous investments made by ADNOC in the SARB field. ADNOC retains a majority 60 per cent stake in the offshore concession that will be operated by ADNOC Offshore, a subsidiary of ADNOC, on behalf of the concession partners.
 
OMV is already working with ADNOC on a number of other projects across the company’s value chain, including appraisal of the Shuweihat sour gas field. In May 2017, ADNOC and OMV also agreed to work together to explore potential opportunities in support of ADNOC’s downstream businesses and the company’s 2030 smart growth strategy. The agreement provides for cooperation in a number of areas, including the evaluation of opportunities in downstream projects, the exchange of knowledge and experience in refining operations and refinery-petrochemical integration and optimization, and downstream technical and maintenance support.
 
With Group sales of EUR 20 billion (AED 90.48bn) and a workforce of 21,000 employees (2017), OMV is Austria’s largest listed industrial company. In Upstream, OMV has a strong base in Romania and Austria and a balanced international portfolio, including the North Sea, the Middle East and Africa, and Russia as well as other core regions. In 2017, OMV’s daily production was approximately 348,000 boe. In Downstream, OMV operates three refineries with a total annual processing capacity of 17.8 million tonnes.
 
Under ADNOC’s 2030 Strategy, crude production capacity is set to increase to 3.5 million bpd by the end of 2018. ADNOC has also placed significant focus on its downstream business with plans to double crude refining capacity and triple production of petrochemical and higher value products to take full advantage of the fastest growing segment in the oil and gas industry.

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