Here’s why ADNOC is teaming up with BP for Egypt gas venture

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ADNOC Group and BP have agreed to form a joint venture in Egypt to focus on natural gas, as the state energy firm builds its international natural gas portfolio while giving the UAE access to production in a country that supplies the fuel to Europe.

BP will contribute its interests in three development concessions, as well as exploration projects in Egypt to the venture while ADNOC will provide cash to help fund future growth opportunities.

ADNOC will hold a 49 per cent stake in the venture and BP will be the majority shareholder with 51 per cent shareholding.

“The progressive joint venture partnership will enhance Egyptian energy security and the economic potential of the region’s most populous Arab country,” said Musabbeh Al Kaabi, ADNOC executive director for Low Carbon Solutions and International Growth.

“Building on our long-standing strategic partnership with BP, ADNOC looks forward to continue exploring other opportunities as we collectively seek to decarbonise our operations and lead a just and equitable energy transition.”

The venture gives the Abu Dhabi energy major access to supplies from one of Egypt’s biggest gas fields – the Zohr deposit

The concessions that are part of the deal include the Shorouk in which BP holds a 10 per cent interest, contains the producing Zohr field and Abu Dhabi state investor Mubadala Investment Company also owns a separate 10 per cent.

BP’s 100 per cent holding in the North Damietta concession, which contains the producing Atoll field, and its 50 per cent stake in North El Burg, which contains the undeveloped Satis field, will also be transferred to the venture.

ADNOC and BP also said that the North El Tabya, Bellatrix-Seti East and North El Fayrouz exploration permits will also be transferred to the venture.

The deal, which is subject to regulatory approvals, is likely to be completed in the second half of this year.

ADNOC’s decarbonisation push

Meanwhile, natural gas is an important transitional fuel with lower carbon emissions when burned compared to other fossil fuels. It also serves as an important raw material in industrial value chains.

The venture with BP is the latest in ADNOC’s push for international growth following the acquisition of stakes in a gas field in Azerbaijan and the signing of several liquefied natural gas (LNG) sales agreements.

Earlier in January, ADNOC Gas signed a 10-year LNG supply agreement with GAIL India to deliver 0.5 million metric tonnes annually. The deal with GAIL India follows several LNG sales agreements including those with Japan Petroleum Exploration Company, TotalEnergies Gas and Power, Indian Oil Corporation, and PetroChina International.

The national energy champions increased its budget allocation for decarbonisation projects, technologies and lower-carbon solutions to a record $23bn (Dhs84.4bn).

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