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Mon 12 Mar 2018 10:49 AM

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Eni strikes $1.8bn in oil and gas deals with Abu Dhabi

Abu Dhabi's Mubadala Investment agreed to pay Eni $934 million for a 10% stake in the Shorouk concession

Eni strikes $1.8bn in oil and gas deals with Abu Dhabi
Dr. Sultan Ahmed Al Jaber (front right), ADNOC Group CEO, and Claudio Descalzi (front left), CEO of Eni, sign historic agreements awarding Eni stakes in two of Abu Dhabi’s offshore concessions, witnessed by Sheikh Mohamed, Crown Prince of Abu Dhabi (back center right), and Paolo Gentiloni, Prime Minister of Italy (back center left).

Italian energy company Eni SpA won rights to pump oil at two blocks off the coast of Abu Dhabi and sold the Middle Eastern crude producer a stake in Egypt’s giant Zohr natural gas field, a deal involving combined payments of $1.8 billion.

Abu Dhabi National Oil Co. awarded Eni a 10 percent share in the Umm Shaif and Nasr oil fields in the Arabian Gulf for a payment of $575 million, the companies said. Rome-based Eni will also take a 5 percent stake in the Lower Zakum deposit for $300 million, they said.

At the same time, Abu Dhabi government-owned Mubadala Investment Co. agreed to pay Eni $934 million for 10 percent of Egypt’s Shorouk concession, the Mediterranean area containing the Zohr gas field, Eni and Mubadala said in separate statements.

Eni’s 40-year oil contract with Abu Dhabi will give it long-term access to crude and enable the company to expand its regional business, said Tom Quinn, a Dubai-based analyst at consultant Wood Mackenzie Ltd. Eni produces crude and gas in Libya and oil in Iraq, in addition to its operations in Egypt, where it started producing gas from the giant offshore Zohr field in December.

Downstream ambitions

Abu Dhabi, the largest sheikhdom in the United Arab Emirates, holds most of the nation’s crude. It split an offshore production concession that expired last week into three blocks, and Eni is the fourth international entrant to secure rights to one of the new areas. Like its larger neighbors Saudi Arabia and Iraq, Abu Dhabi is also seeking gas to generate power for industries such as petrochemicals.

The emirate is seeking partners that can contribute technology and join projects to double refining capacity and nearly triple petrochemical output, Adnoc said last week. It plans to offer projects for investment as early as May and will also seek bids for new exploration blocks, the company said.

Further collaboration with Eni “would create significant added value to Adnoc’s refining assets,” the Italian company’s Chief Executive Officer Claudio Descalzi said in a statement.

Eni ‘under-exposed’

“Eni is very strong in North Africa, but has traditionally been under-exposed to the Middle East,” Wood Mackenzie’s Quinn said in an email. Adnoc “is looking to find a balance in its strategic partners” between those from major oil-importing nations such as Japan and India and international oil companies with technology and project expertise, he said.

Cia Espanola de Petroleos, a Spanish refiner owned by Mubadala, paid $1.5 billion for a 20 percent stake in Abu Dhabi’s Sateh Al Razboot and Umm Lulu fields in a deal announced Feb. 18. A group of Indian companies paid $600 million for rights to 10 percent of Lower Zakum on Feb. 10, and Japan’s Inpex Corp. bought the same-sized stake last month.

OMV, an Austrian energy company almost 25 percent owned by Mubadala, is also poised to win a stake in the offshore concessions, people with knowledge of the matter said in February.

Abu Dhabi plans to raise oil-output capacity to 3.5 million barrels a day by the end of the year, even as the UAE curbs production as part of a global effort to clear a glut.

Adnoc says it currently can pump about 3 million barrels daily, with just under half coming from offshore deposits. Abu Dhabi holds about 6 percent of the world’s crude reserves.

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