New Delhi: In a boost to India’s energy security efforts, Abu Dhabi National Oil Co (Adnoc), the state-run oil company of the United Arab Emirates (UAE), on Monday awarded the exploration rights for the Abu Dhabi Onshore Block 1 to an Indian consortium of state-run Bharat Petroleum Corp Ltd (BPCL) and Indian Oil Corp Ltd (IOC).
This comes in the backdrop of India’s evolving energy security architecture, with the UAE supplying 6% of India’s crude oil imports. With three million barrels per day of crude oil production, Adnoc is the world’s 12th-largest producer. The UAE is a member of the Organization of Petroleum Exporting Countries (Opec), which accounts for around 83% of India’s total crude oil imports and 40% of global production.
“The award has been endorsed by Abu Dhabi’s Supreme Petroleum Council (SPC) and represents a further deepening of the fast-growing UAE-India energy relationship as well as the continued expansion of Adnoc’s strategic partnerships with those who can provide access to key growth markets for the company’s crude oil and products," Adnoc said in a statement on Monday.
Adnoc is looking to expand its presence in India by investing in refining and petrochemical projects and stocking more crude oil in India, the world’s third-largest energy consumer. India’s worry over crude oil prices stems from its energy needs being primarily met through imports.
“In the past 12 months, ADNOC has enhanced its strategic energy links with India, a key growth market for crude, refined and petrochemical products. It is the only foreign energy company, so far, to partner in India’s strategic petroleum reserves programme. It is also a stakeholder in one of India’s largest refinery and petrochemicals projects, to be constructed on India’s west coast. In addition, in February 2018, for the first time, an Indian consortium of three companies, comprising ONGC Videsh, Indian Oil Company and Bharat PetroResources Ltd, a 100% subsidiary of Bharat Petroleum Corporation, was awarded a 10% participating interest in Abu Dhabi’s offshore Lower Zakum Concession," the statement said.
Mint reported on 21 June about Adnoc’s plans to pick up 25% in the $44-billion refinery and petrochemicals project in Maharashtra, post which Saudi Aramco and Indian Oil Corp Ltd will hold 25% each in the project, while 12.50% each will be held by Hindustan Petroleum Corp Ltd (HPCL) and Bharat Petroleum Corp. Ltd (BPCL).
“The consortium will hold a 100% stake in the exploration phase, investing up to AED 626 million ($170 million), including a participation fee, to explore for and appraise oil and gas opportunities in the block," the statement added.
This comes at a time of growing uncertainties in the global energy market. International crude oil prices have been hit by factors such as the moves made by the Opec and Russia to cut supplies. Also, the US has imposed sanctions on state-run oil firm Petr leos de Venezuela SA, and President Donald Trump has pulled the US out of a 2015 pact with energy-rich Iran, which was signed to curb the Islamic Republic’s nuclear programme in return for ending sanctions.
“This award highlights the important role of energy cooperation in strengthening the strategic relationship between the UAE and India," UAE’s minister of state and Adnoc Group CEO Sultan Ahmed Al Jaber said in the statement.