Italian major ENI has signed two concession agreements with ADNOC. ENI took a 5% stake in the Lower Zakum oilfield, offshore Abu Dhabi, and 10% in the Umm Shaif and Nasr oil, gas and condensate fields, also offshore Abu Dhabi, for a total participation fee of approximately $875 million. The agreements run for 40 years.
“Eni is very strong in North Africa but has traditionally been underexposed to the Middle East when compared to its peers,” Tom Quinn, Senior Research Analyst, Middle East Upstream at Wood Mackenzie, said. “The company has picked up exploration blocks in Oman and Lebanon, which, being frontier, are high-risk but potentially high-reward. To balance this, the ADNOC deal provides low-risk, long-term barrels, and lays the foundation for ENI’s Middle East portfolio. This is the first award by ADNOC to a major (in the offshore renewal), and shows it is looking to find a balance in its strategic partners between companies from major buyers, such as Japan and India, and IOCs with technology and project delivery expertise.”
Lower Zakum is located about 65 km offshore Abu Dhabi. The discovery dates to 1963 and came on stream in 1967. It has a target production of 450,000 bpd. Umm Shaif and Nasr lie 135 km offshore Abu Dhabi and have a target production of 460,000 bpd.