Japan's Inpex Wins Abu Dhabi Oil Stake for $600 Million

Updated on
  • Third concession awarded in as many weeks for Abu Dhabi fields
  • Spanish refiner Cepsa, Indian companies also have contracts

Japan’s Inpex Corp. extended development rights for offshore oil fields in Abu Dhabi as the Middle Eastern producer seeks to replace a concession expiring next month.

Abu Dhabi National Oil Co. awarded Inpex a 10 percent stake in the Lower Zakum offshore oil field in return for a payment of $600 million, the companies said Monday. The 40-year contract starts March 9. The Japanese producer also paid $250 million to extend a separate concession, they said.

Adnoc Extends East

Abu Dhabi's state producer awards stake to Inpex as it seeks new contracts for 3 oil blocks

Source: Adnoc company statements

The deal is the third in as many weeks for the government of the largest sheikhdom in the United Arab Emirates. Spanish refiner Cia Espanola de Petroleos SA paid $1.5 billion for a 20 percent stake in the Sateh Al Razboot and Umm Lulu fields in a deal announced Feb. 18, and a group of Indian companies paid $600 million for rights to 10 percent of the Lower Zakum field on Feb. 10. Japan is the largest buyer of oil from Abu Dhabi, followed by India.

“We have been involved in this project for 45 years,” Hiroshi Fujii, Inpex’s managing executive officer, told reporters in Tokyo. Lower Zakum is the largest of the fields for which Abu Dhabi is offering partnership rights and has a target output capacity of about 450,000 barrels a day, Inpex said in its statement, without providing a date for the production goal.

The field has “huge reserves and production” with “very low” output costs, Fujii said, without providing details. The new concession terms for Lower Zakum are more attractive than the expiring deal since the profit of international partners will be linked to oil sales, compared with the previous terms which were for fixed margins, Fujii said.

Inpex was also awarded a 25-year extension of the Satah and Umm Al Dalkh concession and through that agreement has been awarded an additional 28 percent interest in the Umm Al Dalkh oil field, the companies said. That takes Inpex’s stake to 40 percent at both fields with Adnoc holding the rest.

Asia Bound

Oil-rich states in the Middle East are looking increasingly to Asia, their biggest market, for funds to help build energy infrastructure and for opportunities to tap into growing demand. Oil prices that have recovered to nearly $70 a barrel now, from about half that just two years ago, are driving state-owned and private producers to look at new developments.

The Japanese company is the first of the partners in the present offshore concession to renew its holding in the deposits. The other partners with Adnoc in the venture that expires March 8 are Total SA and BP Plc. Adnoc has split that single concession into three blocks, giving it the opportunity to bring in a broader list of international partners. Adnoc will maintain a 60 percent holding in all the fields.

Adnoc said it is seeking to close contracts with other potential partners for remaining stakes in those fields. The third concession comprises the Nasr and Umm Shaif fields and Adnoc hasn’t awarded any stakes for that area yet.

(Updates with Inpex comment in fifth paragraph.)
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