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A consortium involving India’s biggest state oil company ONGC and two smaller companies have bought for US$600 million a 10-percent interest in the Lower Zakum offshore oil concession in the UAE. This is the first Indian acquisition in the Emirati upstream industry and is part of New Delhi’s efforts to ensure future oil supplies amid fast demand growth.
For ADNOC, the Abu Dhabi state oil company, the 40-year contract is a way of expanding its presence internationally into a key growth market. The acquisition followed the split of the ADMA-OPCO concession into three smaller ones, including Lower Zakum, Umm Shaif, and Nasr, and Umm Lulu and Al Razboot. The shareholders of the original concession include BP, Total, and Japan Oil Development Co.
The fields making up the ADMA-OPCO concession produce around 700,000 bpd, but their capacity is on track to be expanded to 1 million bpd over the next three years. ADNOC is now looking to award another 30 percent in Lower Zakum, retaining 60 percent in the concession. Bidders are also sought for the other two new concessions after the split of ADMA-OPCO. The original concession will expire in March.
Earlier this month a government report said Indian state oil companies will increase the country’s total refining capacity by 77 percent over the next 12 years to satisfy the growing domestic demand for fuels. In barrel terms, the country’s capacity after the expansion will hit 8 million bpd, from the current 5 million bpd. In addition to its crude oil capacity boost, India will also increase the number of LNG import terminals to as many as 15 from the current four to feed its growing power generation capacity.
India, which is dependent on imported oil to satisfy most of local demand, imported 4.37 million barrels daily last year, an all-time high. Meanwhile, it began the refining capacity boost, with Reliance Industries raising the throughput of the largest refinery in the world by 30 percent.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.