BP (BP.L), a global oil major, and the state-owned Abu Dhabi National Oil Company will collaborate to establish a joint venture in Egypt, with an initial focus on natural gas.
The joint venture, expected to be formed in the second half of this year, will be 51% owned by BP and 49% by ADNOC, the companies said.
The BP-ADNOC Egyptian joint venture was originally planned to be the second phase of the two companies’ cooperation in the Eastern Mediterranean after the planned acquisition of a 50% stake in Israeli gas producer NewMed. Negotiations on the proposed deal, first announced in March 2023, appear to have made little progress, in particular since the start of the Israel-Hamas war on Oct. 7.
BP CEO Murray Auchincloss told Reuters last week that talks on the NewMed deal were ongoing.
ADNOC, the UAE’s oil giant, is seeking to grow its gas business domestically and abroad and has called natural gas a transition fuel to renewable energy sources. BP aims to reduce its oil and gas output by 25% by 2030 from 2019 levels but continues to invest heavily in fossil fuels.
For the joint venture, BP will contribute its interests in three development concessions and exploration agreements in Egypt, while ADNOC will make a proportionate cash contribution that can be used for future growth opportunities, they said.
Egypt has been suffering from a slow-burning economic crisis and a chronic shortage of foreign currency and has been in talks with the International Monetary Fund to revive and expand a $3 billion loan agreement signed in December 2022.
Ties between the UAE and Egypt are strong, with the Gulf state supporting Cairo through past financial crises with direct capital injections and investments, more recently focusing on the latter.
The joint venture’s concessions will include Shorouk, North Damietta, North El Burg, North El Tabya, Bellatrix-Seti East, and North El Fayrouz.
BP owns 10% of Shorouk, which contains the giant Zohr field, and fully owns North Damietta, which includes the gas-producing Atoll field.
BP has a 50% interest in North El Burg, which contains the undeveloped Satis field. The other three concessions are exploration agreements.
“Musabbeh Al Kaabi, ADNOC’s executive director for low-carbon solutions and international growth, stated in the joint announcement that this collaborative venture will bolster Egypt’s energy security and unlock economic opportunities in the region’s largest Arab nation.”
