ONGC Videsh, which is the international arm of ONGC, has bought the stake in consortium with Indian Oil Corporation (IOC) and Bharat PetroResources, the international unit of Bharat Petroleum.

The agreement, which comes with a term of 40 years, would give the Indian consortium an annual share of about 2MMT in the concession.

Currently, production at the Lower Zakum oil field is close to 400,000bopd and by 2025, it is expected to reach plateau target of 450,000bopd.

The concession was awarded to the ONGC Videsh-led consortium and Abu Dhabi National Oil Company (ADNOC) by Abu Dhabi’s Supreme Petroleum Council (SPC) during the Indian Prime Minister Narendra Modi’s visit to the UAE.

Modi said: “The offshore concession in favour of the Indian consortium has taken our bilateral engagement in the oil and gas sector to a new level, which befits the comprehensive strategic partnership between our two countries.

“I am happy to note that we have progressed from a buyer-seller relationship to an era of mutual investments in the oil and gas sector.”

Lower Zakum was previously part of a former ADMA offshore concession made up of the three areas Lower Zakum, Umm Shaif and Nasr and Sateh Al Razboot (SARB) and Umm Lulu.

According to ADNOC, the restructuring of concessions has been done to maximize commercial value, widen the partner base and to allow greater market access.

The state-controlled ADNOC will retain its 60% stake in the Lower Zakum field while finalizing potential partners for the remaining 30% ownership.

ADNOC Group CEO Al Jaber said: “Our strategic partnership with ONGC, and the other members of the consortium, marks a new chapter in the strategic and economic relationship between the UAE and India.

“This mutually beneficial partnership will help India meet its growing demand for energy and refined products, create opportunities for ADNOC to increase its market share in a key growth market, and build a solid foundation as ADNOC explores potential international investments, particularly focused on downstream opportunities.”

For ONGC Videsh, the transaction marks its entry in the UAE region. It is also the first time that Indian oil and gas firms have been awarded a stake in the development of Abu Dhabi’s hydrocarbon resources.

Image: Signing of the Lower Zakum concession agreement. Photo: courtesy of Abu Dhabi National Oil Company.