Abu Dhabi awards oil field stake to Cepsa for $1.5bn

UAE's capital Abu Dhabi
UAE's capital Abu Dhabi

Abu Dhabi awarded a second slice of its offshore oil concessions in as many weeks, this time to Spanish refiner and producer Cia Espanola de Petroleos SA for a $1.5 billion fee.

Government-owned Abu Dhabi National Oil Co. awarded Madrid-based Cepsa a 20 percent stake in development rights for the Sateh Al Razboot and Umm Lulu fields in the Persian Gulf, Adnoc said Sunday. Abu Dhabi’s Mubadala Investment Co. owns Cepsa.

The 40-year contract is the second that Adnoc has signed for its offshore deposits this month. Adnoc secured a $600 million deal with a group of Indian companies for the Lower Zakum field on Feb. 10. The emirate split an existing offshore oil partnership into three blocks and is seeking new partners to hold as much as 40 percent of each of the the new concessions. The current partnership governing those deposits as a single block will expire on March 8.

“The agreement reflects Adnoc’s new partnership approach, as we expand and diversify our partner base,” Chief Executive Officer Sultan Al Jaber said in the statement.

Abu Dhabi holds about 6 percent of global crude reserves and produces most of the oil in the United Arab Emirates. While the U.A.E. is curbing output in an effort by two dozen nations to clear a global glut, the sheikhdom of Abu Dhabi plans to raise output capacity to 3.5 million barrels a day by the end of the year. Adnoc says it can pump about 3 million barrels daily with just under half of it coming from offshore deposits.

The producer is seeking to attract international partners that can contribute technology, financing or access to markets where oil demand is growing. Neither Cepsa nor the Indian companies that won a 10 percent stake at the Lower Zakum concession were partners in the emirate’s main producing fields.

Cepsa signed an agreement in November to work with Adnoc on a petrochemical plant and has an indirect holding in three smaller offshore deposits. India is the second-biggest buyer of U.A.E. crude behind Japan, according to Bloomberg tanker-tracking data.

The oil block where Cepsa will operate also contains the smaller Bin Nasher and Al Bateel fields, Adnoc said. Targeted production for the block is 215,000 barrels a day, Adnoc said earlier this month, without specifying a date.

Adnoc will retain a 60 percent stake in each of the three blocks for which it’s seeking partners. The company has said it was in talks with more than 10 potential partners for the fields. The company is completing agreements for all three concessions, it said Sunday, without saying when it would announce additional deals.