Abu Dhabi National Oil Company will acquire a 30 per cent equity stake in Azerbaijan's Absheron gas and condensate field in the Caspian Sea, as part of its strategic growth plans and entry into the international gas market.
Under the agreement, Azerbaijan's state oil company Socar and France's TotalEnergies will each hold a 35 per cent stake in the gasfield, Adnoc said in a statement on Friday.
TotalEnergies had previously held a 50 per cent share alongside Socar in Absheron.
Financial details of the transaction were not disclosed.
“We believe this strategic partnership with Socar and TotalEnergies unlocks the potential of the Caspian region for decades to come, and complements a broader energy collaboration between the UAE and Azerbaijan that will accelerate the growth of the global renewable energy sector, as both countries take bold steps to transition towards a lower-carbon future,” Musabbeh Al Kaabi, executive director of low carbon solutions and international growth at Adnoc, said.
The Middle East is expected to spend up to $120 billion to boost natural gas production by more than 19 per cent by 2030, according to energy consultancy Wood Mackenzie.
The region’s natural gas output will rise to 86 billion standard cubic feet a day by the end of the decade, from 72 bcfd currently, it said in a report in May.
Exports of liquefied natural gas surged last year, particularly from the Gulf region, as European countries scrambled to secure alternative sources of energy and reduce their reliance on Russian gas.
Adnoc Gas, a unit of Adnoc, has access to 95 per cent of the UAE's natural gas reserves, estimated to be the world's seventh-largest. It also supplies more than 60 per cent of the country's gas needs.
The partnership in Azerbaijan will enable Adnoc to build a major footprint in a region with prolific natural resources and significant growth potential and facilitate a route into “attractive international growth markets for gas in Europe and Central Asia”, it said.
As the world moves to a low-carbon energy system, natural gas will play a crucial role as a key transition fuel, Adnoc said.
The investment in the Absheron gasfield will further cement Adnoc's position as “a reliable supplier of lower-carbon energy”, the company said.
The deal also builds on existing renewable energy capacity agreements between the UAE and Azerbaijan.
The transaction complements Adnoc's investment through Abu Dhabi clean energy company Masdar to develop 10 gigawatts of renewable energy capacity from solar, onshore and offshore wind, and green hydrogen in collaboration with Socar, supporting both nations’ shared energy transition agenda, the company added.
Last August, Masdar achieved a financial close on its 230-megawatt Garadagh solar power plant in Azerbaijan. The plant is expected to generate half a billion kilowatt hours of electricity annually, meeting the needs of more than 110,000 homes.
Azerbaijan’s favourable investment climate offers conducive conditions for foreign investors in the energy sector, Socar president Rovshan Najaf said.
The Absheron deal reaffirms Azerbaijan’s position as a “reliable partner in the energy sector”, he added.
Production of the first phase in the Absheron gasfield started in early July, according to Nicolas Terraz, president of exploration and production at TotalEnergies.
The first gas from Absheron was delivered in early July.
The gasfield offers significant further development potential to meet growing gas demand, he said.
As part of their expanding partnership, Adnoc and Socar also signed an preliminary agreement that will see both companies evaluate potential areas of collaboration across renewable energy, low carbon solutions and upstream projects in the UAE, Azerbaijan and internationally, the statement added.
Azerbaijan, which largely relies on natural gas to meet its energy needs, plans to increase its installed power capacity to 30 per cent from renewable sources by 2030 in an effort to diversify its economy and reduce greenhouse gas emissions.
The country is developing several clean energy projects.
In January last year, Saudi Arabia's Acwa Power and Azerbaijan's energy ministry started work on a $300 million, 240-megawatt wind power station.