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British energy giant BP has struck a deal with the UAE’s national oil company as it deepens its ties with the Middle East.
BP is to form a joint venture with Abu Dhabi National Oil Company (Adnoc) to focus on the production of two large gas fields in Egypt.
Under the agreement, BP will transfer interests in three gas fields and exploration rights to the joint venture.
Abu Dhabi National Oil Co. will inject cash into the joint venture, which will be established in the second half of this year. A major goal was to raise funds for BP to expand further in the Middle East. Adnoc is run by UAE Energy Minister Dr. Sultan Ahmed Al Jaber and also controversially hosted the COP28 climate summit last year.
Critics say it would be inappropriate for fossil fuel executives to oversee the negotiations. The BBC claimed that the UAE planned to use the UN meeting to discuss oil and gas deals, an accusation that Sultan Jaber called “false, untrue, incorrect and inaccurate”.
Sultan Al Jabar is also chairman of Emirati media company IMI, which provided the bulk of the funding for The Telegraph’s £1.2bn takeover bid.
The UAE’s involvement through the joint venture RedBird IMI has triggered multiple government investigations amid concerns about state interference and press freedom.
The new joint venture will be 51% owned by BP and 49% by Abu Dhabi National Oil Company (Adnoc). BP and ADNOC have worked together in the region for decades, with ADNOC also supporting BP’s hydrogen plans on Teesside. Last year, the two teamed up to bid $2 billion for a 50% stake in Israeli natural gas company NewMed.
ADNOC is the world’s 12th largest oil company in terms of production.
Adnoc executive Musabbeh Al Kaabi said the move was part of the company’s plans to expand its international gas portfolio.
“ADNOC looks forward to continuing to explore other opportunities as we jointly seek to decarbonize our operations,” he said.
William Lin of BP said: “Our long-term strategic partnership with Adnoc has spanned more than 50 years.
“We will build on BP and its partners’ 60 years of safe and efficient operations in Egypt to continue to produce and deliver safe, low-carbon energy in the form of natural gas to the country.”
The concessions transferred by BP to the new joint venture include interests in the atoll and the Zoar offshore gas field.
Zohr is the largest known offshore oil field in the Mediterranean, with natural gas reserves of 30 trillion cubic feet. In 2015, Italian company Eni discovered it in a mile of water in Port Said.
The field, which lies under 2.5 miles of rock, came on stream in 2017, when BP also took a 10% stake.
Production was expected to peak in 2030 but fell unexpectedly by 11% last year due to seawater infiltration issues. The company said the problem has been resolved.
BP discovered the atoll oil field in 2015 in rocks four miles below the seabed and began production in 2018.
The field’s main reservoir contains an estimated 1.5 trillion cubic feet of natural gas and produces 350 million cubic feet of natural gas per day.
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