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INPEX acquires stake in Lower Zakum Concession

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Oilfield Technology,

INPEX CORPORATION (INPEX) has been awarded a 10% participating interest in the Lower Zakum concession offshore Abu Dhabi in the United Arab Emirates (UAE) by the Supreme Petroleum Council of the Emirate of Abu Dhabi (SPC). The agreement, which has a term of 40 years, comes into effect on March 9, 2018, and lasts until March 8, 2058. INPEX’s interests in the Lower Zakum concession will be held by JODCO Lower Zakum Limited, a subsidiary of INPEX.

Additionally, INPEX has concluded a 25 year extension of the Satah and Umm Al Dalkh concession, also offshore Abu Dhabi, with the SPC and the Abu Dhabi National Oil Company (ADNOC). This follows the agreement in principle for the extension announced last year. Through the agreement, which runs from 9 March 2018 until 8 March 2043, INPEX has been awarded an additional 28% participating interest in the Umm Al Dalkh Oil Field, elevating its participating interest to 40% in both oil fields. INPEX’s interests in the Satah and Umm Al Dalkh concession will be held by Japan Oil Development Company (JODCO), a subsidiary of INPEX.

Operations at both concessions will be undertaken by ADNOC Offshore.

These developments attest to the further enhancement of relations between the company and the UAE, following the announcement last year on the production capacity increase and 10 year concession extension of the Upper Zakum concession offshore Abu Dhabi as well as the 2014 concession extension agreement for that oil field.

H.E. Dr. Sultan Ahmed Al Jaber, UAE Minister of State and CEO of ADNOC Group, said, “For over 40 years, INPEX, along with its subsidiary JODCO, has been a strategic partner to Abu Dhabi and ADNOC. Together with our other partners, it has played an important role in the development of our offshore, and onshore, oil and gas assets. This agreement extends that long-standing partnership between one of the world’s leading oil and gas resource holding countries and the third largest global economy, and represents an attractive and strategic opportunity for both parties that will deliver mutual benefits. As we accelerate delivery of our 2030 smart growth strategy, ADNOC aims to seize new opportunities from increasing energy demand in Asia’s expanding economies. Once again this agreement demonstrates the international market’s confidence in ADNOC’s long-term production targets and our plans to maximise value from our offshore resources.”

Toshiaki Kitamura, President and Chief Executive Officer of INPEX, said: “This agreement ensures INPEX continues to enjoy access to significant, competitive and reliable resources that we understand very well. The agreement results, in part, from the unwavering long-term partnership that INPEX has built and maintained with Abu Dhabi over more than 40 years, and demonstrates INPEX’s long-term commitment to the further development of Abu Dhabi’s energy industry over the next several decades.”

The Lower Zakum Oil Field was discovered in 1963 approximately 80 km offshore northwest of Abu Dhabi City, and began production in 1967. The oil field, which is the largest in the current ADMA offshore concession, has a target production of approximately 450 000 bbls of crude oil per day. The Umm Al Dalkh Oil Field was discovered in 1969 approximately 25 km northwest of Abu Dhabi City, and began production in 1985. The Satah Oil Field was discovered in 1975 approximately 200 km northwest of Abu Dhabi City, and began production in 1987. With respect to the Satah and Umm Al Dalkh oil fields, INPEX, together with ADNOC, its sole partner in the concession, will target a combined production capacity increase to approximately 45 000 bbls of crude oil per day.

While the current agreements for the ADMA offshore concession and the Abu Al Bukhoosh Oil Field in which INPEX has held participating interests for numerous years expire on 8 March 2018, the awarding to INPEX of a participating interest in the Lower Zakum concession and the extension of the company’s concession for the Satah and Umm Al Dalkh oil fields will contribute to the increase in INPEX’s production capacity in the UAE over the medium- to long-term.

INPEX’s production capacity increase will also be supported by the company’s activities in the Upper Zakum Oil Field, where production capacity is expected to increase initially to 750 000 bpd and eventually to 1 million bpd, and the ADCO Onshore Concession awarded to INPEX in 2015, where production capacity is targeted to increase from the current 1.6 million bpd to 1.8 million bpd by the end of 2018. This production capacity increase in the UAE will not only significantly contribute to INPEX’s continuous enhancement of its exploration and production activities as outlined in the company’s medium- to long-term vision, but also to bolstering Japan’s energy security.

The awarding to INPEX of a participating interest in the Lower Zakum Oil Field and the extension of the company’s concession for the Satah and Umm Al Dalkh oil fields can be attributed to the UAE’s recognition of the company’s involvement in oil development and production activities in Abu Dhabi extending over 40 years as well as INPEX’s social contribution efforts undertaken over numerous years, in addition to the proactive resource diplomacy carried out by the Japanese government vis-à-vis the UAE.

INPEX sees the UAE as one of its core business areas, and will continue to strive to strengthen its oil development activities and contribution efforts in Abu Dhabi, as well as help further deepen the cordial relations between Abu Dhabi and Japan.

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