Companies sign 40-year concession agreements to develop Umm Shaif’s giant gas cap, Nasr and Lower Zakum; Total paid ADNOC $1.4 Billion in participation fees

 

Total has signed two new 40-year concession agreements with the Supreme Petroleum Council of the Emirate of Abu Dhabi (United Arab Emirates) and the Abu Dhabi National Oil Company (ADNOC). In the frame of these agreements, Total is granted a 20% participating interest in the new Umm Shaif & Nasr concession and 5% in the Lower Zakum concession, effective March 9th, 2018.

Total paid a total participation fee of US$1.45 billion, which represents an access cost of around 1 dollar per barrel of reserves, Total said. These interests bring to Total a production of 80,000 barrels of oil per day in 2018. ADNOC said Total’s participation fees included AED 4.2 billion (US $1.15 billion) to enter the Umm Shaif and Nasr concession and a fee of AED 1.1 billion (US $300 million) to enter the Lower Zakum concession. Both concessions are operated by ADNOC Offshore, a subsidiary of ADNOC, on behalf of all concession partners. Total is ADNOC’s largest international partner and has been active in Abu Dhabi’s oil and gas sector since 1939.

Located about 135 and 65 kilometers off the coast respectively, Umm Shaif and Lower Zakum are two of the major fields offshore and counting for around 20% of Abu Dhabi production. In addition to the huge oil reserves and the potential to grow oil production beyond 450,000 barrels per day (including Nasr – the present production being at around 300,000 barrels per day).

Umm Shaif also contains a giant gas-cap, which is to be developed in the scope of the concession with a gas production target of 500 mmscfd. ADNOC Offshore (100% owned by ADNOC) will be the operator of all concessions offshore Abu Dhabi. Total, as a partner in the concessions, will bring its expertise by providing personnel and carrying out studies, the companies said.

The Umm Shaif field’s Arab reservoir is characterized by a huge gas cap – one of the largest in the region – with reserves containing condensates.

Abu Dhabi National Oil Company (ADNOC) and Total Get Together for Offshore Gas Development

Abu Dhabi National Oil Company (ADNOC) and Total Get Together for Offshore Gas Development

Based on ADNOC’s development and initial piloting activities in the gas cap, the concession partners will further pursue the technical and economic evaluation of the development. The gas cap overlays an oil rim which, in combination with Nasr, has a crude production capacity of 460,000 bpd.

ADNOC said it plans to process 500 million standard cubic feet of gas per day from Umm Shaif’s gas cap to help meet Abu Dhabi’s growing domestic demand for energy and reduce reliance on imported gas. The condensates, from the gas cap, will be refined for petrochemical applications.

The Umm Shaif and Nasr concession and the Lower Zakum concession have been created from the former ADMA offshore concession, which Total has been a partner in since 1953. It has been divided into three separate concession areas, ADNOC said in a press release.

In the Lower Zakum concession, Total joins an Indian consortium, led by ONGC Videsh, Japan’s INPEX, as well as Eni as stakeholders. ADNOC is finalizing opportunities, with potential partners, for the remaining 10% of the available 40% stake in the Lower Zakum concession, and for the remaining 10% stake in the Umm Shaif and Nasr concession. ADNOC retains a 60% majority share in both concessions.

The current ADMA offshore concession, which expired on 8 March 2018, has been split into three separate offshore concessions. These are operated by ADNOC Offshore.

Who’s involved in the concessions?

Offshore concessions awarded or to be awarded are:

Abu Dhabi National Oil Company (ADNOC) and Total Get Together for Offshore Gas Development

Abu Dhabi National Oil Company (ADNOC) and Total Get Together for Offshore Gas Development

 

ADNOC reported that it produces about 3 million barrels of oil and 9.8 billion cubic feet of raw gas a day.


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