Adnoc and BP have agreed to form a joint venture in Egypt that will focus on the development of gas assets.
As part of the deal, BP will transfer its interests in three development concessions and exploration agreements in Egypt to the joint venture.
Adnoc, meanwhile, will make a proportionate cash contribution, which can be used for future growth opportunities, the companies said on Wednesday.
The agreement with BP “represents a significant step forward as Adnoc builds its international natural gas portfolio”, said Musabbeh Al Kaabi, Adnoc's executive director for low carbon solutions and international growth.
The partnership will “enhance Egyptian energy security and the economic potential of the region’s most populous Arab country”, he said.
The assets include BP’s 10 per cent stake in the Shorouk concession that contains the giant Zohr gasfield, and the North Damietta offshore block in Egypt's Nile Delta.
BP will also transfer a 50 per cent interest in the North El Burg offshore concession to the new joint venture. Four gas discoveries have been made on the block since 2008, with Satis being the largest discovery, accounting for more than half of all reserves.
“This dynamic JV [joint venture] offers a platform for international growth that advances our long-standing and strategic partnership with Adnoc,” said William Lin, BP’s executive vice president of regions, corporates and solutions.
The formation of the joint venture is expected to be completed during the second half of 2024, depending on regulatory approvals.
Egypt, which is facing an increase in gas demand from its population of more than 100 million, aims to be a regional energy supplier.
This involves selling its own gas and exporting liquefied natural gas (LNG) sourced from Israel to countries in the Middle East, Africa and Europe.
The discovery of the Zohr field in 2015 was a turning point for the country's oil and gas sector.
The find has attracted substantial foreign investment from Italy’s Eni, while encouraging other international oil companies (IOCs) such as Chevron, Shell and BP, to bid for blocks offered in Egypt’s onshore and offshore concessions.
The four IOCs combined are investing about $22 billion between 2015 and 2030 in Egypt, which accounts for more than 70 per cent of their total investments across North Africa in the period, according to Rystad Energy.
In 2023, BP said it would invest $3.5 billion in Egypt along with its partners over the next three years. A portion of the company's investment will go towards renewable energy projects, including green hydrogen.
The oil and gas industry in the country is experiencing falling production from older oilfields because water is seeping into the reservoirs, mainly the result of challenges in managing the complex geological structures, Rystad said.
Investment in natural gas, seen as a low-carbon alternative to crude oil and coal, has surged in recent years as consumers and industries look to reduce their carbon emissions.
Europe emerged as a major importer of liquefied natural gas in 2022 after Russia slashed exports to the region follow its invasion of Ukraine.
Global gas demand this year is forecast to grow by 2.5 per cent, or 100 billion cubic metres, according to the International Energy Agency.
Expected colder winter weather in 2024, compared to the unusually mild temperatures in 2023, is likely to bring increasing demand for space heating in residential and commercial sectors, the agency said in a report last month.
Adnoc is unlocking untapped unconventional reservoirs as part of its integrated gas strategy, with the aim of making the UAE “gas self-sufficient” by 2030.
Last year, the company raised about Dh9.1 billion ($2.5 billion) from the sale of a 5 per cent stake in its gas business in one of the largest initial public offerings of 2023.
Adnoc continues to own 90 per cent of Adnoc Gas, which has access to 95 per cent of the UAE's natural gas reserves, the seventh largest globally.
The Adnoc subsidiary signed new LNG supply agreements valued between $9 billion and $12 billion in 2023.
