Total ADNOC deal: French oil giant secures $1.45bn stake in Abu Dhabi’s prime offshore oil fields

In a landmark move for both companies, Total has inked a groundbreaking $1.45 billion deal with the Abu Dhabi National Oil Company (ADNOC), securing key stakes in two of Abu Dhabi’s largest offshore oil fields. This deal, which encompasses the Umm Shaif Nasr concession and Lower Zakum concession, is not only a significant financial transaction but also a strategic partnership that will shape the future of the region’s energy landscape. As ADNOC continues to pursue its ambitious growth strategy, Total’s expanded role in these coveted assets underscores the increasing competition for control over the world’s most valuable hydrocarbon resources.

What are the terms of the Total ADNOC deal?

Under the terms of the deal, Total will acquire a 20% stake in the Umm Shaif Nasr concession for $1.15 billion, alongside a 5% stake in the Lower Zakum concession for $300 million. These stakes are secured for a term of 40 years, marking a long-term commitment to one of the world’s most resource-rich regions. ADNOC, which remains the dominant partner in these ventures, continues to hold the majority stakes in both fields.

For Total, the agreement offers access to some of the most lucrative offshore oil reserves in the Middle East. According to the company, the deal is valued at an access cost of approximately $1 per barrel of reserves, making it highly competitive and promising for Total’s growth. The acquisition will add a significant 80,000 barrels per day to Total’s production by 2018, further solidifying its position in the global energy market.

Why is this deal significant for Total and ADNOC?

The Total ADNOC deal is not just a financial transaction; it represents a deepening of the longstanding relationship between Total and ADNOC, two powerhouses in the global oil sector. For Total, this deal forms part of a broader strategy to bolster its presence in the Middle East and secure stable, long-term resources. Patrick Pouyanne, Chairman and CEO of Total, emphasized the strategic nature of the agreement, noting, “Today’s announcement marks a new chapter in Total’s long and successful partnership with Abu Dhabi and ADNOC. These agreements ensure Total secures long-term access to significant and competitive hydrocarbon resources that we already know very well.”

Pouyanne’s statement highlights the importance of Total’s deep expertise and its familiarity with ADNOC’s offshore fields. The deal also positions Total as a key player in Abu Dhabi’s energy future, especially as ADNOC moves towards maximizing the potential of its offshore reserves in line with its 2030 growth strategy.

For ADNOC, the deal further solidifies its leadership in the region’s offshore oil sector. Dr. Sultan Ahmed Al Jaber, CEO of ADNOC Group, emphasized that Total’s involvement is integral to ADNOC’s efforts to unlock the full potential of the Umm Shaif gas cap, which will be vital to meeting ADNOC’s long-term goals for gas production and sustainability. Al Jaber stated, “Total brings deep knowledge and understanding of Abu Dhabi’s offshore oil and gas fields, as well as specialist expertise and technology that will help accelerate the development of the giant Umm Shaif gas cap.”

How do these stakes impact Total’s position in Abu Dhabi’s energy market?

The Umm Shaif Nasr concession and Lower Zakum concession are some of the most significant offshore reserves in Abu Dhabi, holding immense strategic value. These fields are expected to contribute substantially to ADNOC’s production capacity, which will in turn benefit Total through increased production and a solidified position in the UAE’s energy sector. The strategic nature of this deal means Total will not only benefit financially from the acquired stakes but will also continue to play a pivotal role in shaping the development of these key assets over the next several decades.

Additionally, this deal enables Total to enhance its portfolio of offshore oil fields, ensuring that the company continues to benefit from Abu Dhabi’s robust energy infrastructure and its competitive positioning within the global oil market. The access to reserves at an approximate cost of $1 per barrel also provides Total with a significant competitive edge compared to other energy companies seeking similar resources.

What other agreements has Total made with ADNOC?

Beyond securing stakes in the Umm Shaif Nasr concession and Lower Zakum concession, Total has extended its agreement with ADNOC for the Abu Al Bu Koosh field, where it holds a 100% stake. The extension allows Total to continue operating the field for an additional three years, securing its involvement in one of Abu Dhabi’s smaller offshore assets. The Abu Al Bu Koosh field currently produces around 10,000 barrels per day, and this extension ensures that Total retains an ongoing presence in the UAE’s offshore sector.

What’s next for ADNOC’s offshore resources?

This deal is part of ADNOC’s broader strategy to maximize the value of its offshore reserves. As Total secures its position in these fields, ADNOC is also looking to attract other strategic partners. Recently, Italian energy company Eni entered into an agreement with ADNOC, securing a 10% stake in the Umm Shaif Nasr concession and a 5% stake in the Lower Zakum offshore oil field for $875 million. This move further reflects the growing international interest in Abu Dhabi’s offshore resources, and ADNOC is now seeking new partners for the remaining 10% stakes in these fields.

A new chapter for Total and ADNOC’s partnership

The Total ADNOC deal represents a pivotal moment for both companies, reinforcing their long-standing relationship and securing a future of collaboration in the offshore oil sector. With Total’s expertise and ADNOC’s strategic resources, this partnership is well-positioned to maximize the potential of the UAE’s hydrocarbon wealth. As ADNOC continues to focus on its 2030 smart growth strategy, partnerships like these will be critical in achieving its vision of sustainable, long-term energy production.