COP28 President is CEO of a Joint Venture that Includes Sanctioned Russian Company LUKOIL

COP28 President is CEO of a Joint Venture that Includes Sanctioned Russian Company LUKOIL

COP28 President is CEO of a Joint Venture that Includes Sanctioned Russian Company LUKOIL. In October 2019, during Putin's visit to the UAE, Emirati state-owned ADNOC awarded Russian oil and gas giant LUKOIL a 5% stake in the world's largest offshore sour gas development, the Ghasha concession. At the time, LUKOIL was already under US sanctions. ADNOC also signed a cooperation agreement on the Ghasha project with Russia's sovereign fund, RDIF.

Russian President Vladimir Putin and Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, witnessed the exchange of the signed agreements. Both documents were signed on behalf of ADNOC by the Group CEO, Sultan Al Jaber.

Sultan Al Jaber gave LUKOIL a 5% share in the Ghasha development

On October 15, 2019, as part of the state visit of Vladimir Putin to UAE, Abu Dhabi National Oil Company (ADNOC) awarded Russia's LUKOIL a 5% stake in the Ghasha ultra-sour gas concession. The Accession to the Ghasha Concession Agreement was signed by Vagit Alekperov, Co-founder, President, and CEO of LUKOIL, and Sultan Ahmed Al Jaber, CEO of ADNOC.

"In celebration of the friendly ties between both countries", Russian President Vladimir Putin and Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, witnessed the exchange of the signed concession.

Al Jaber and Akperov present the ADNOC-LUKOIL Agreement to Putin and Al Nahyan. (Credit: Lukoil Press Center)

World's largest offshore sour gas development

Under the terms of the concession award, LUKOIL will initially invest $190 million as a signing fee. LUKOIL's share in the concession will make approximately 300,000 tons of oil and 730 million cubic meters of gas annually.

The concession comprises nine shallow gas, oil, and gas condensate fields. The fields are Ghasha, Hail, Hair Dalma, Satah, Bu Haseer, Nasr, SARB, Shuwaihat, and Mubarraz. The project should reach full capacity by 2025. Next to ADNOC and LUKOIL, other partners in the Concession are Italian ENI (25%), German Wintershall Dea (10%), and Austrian OMV (5%). ADNOC holds a 55 percent stake in the Ghasha concession.

Located offshore in the Arabian Gulf, in the western part of Abu Dhabi, the Ghasha gas field project is the world's most extensive offshore sour gas development. It is expected to produce over 40 million cubic meters of natural gas. Also 120.000 barrels per day of crude oil and gas condensates by around 2025.

ADNOC is one of the world's largest oil and gas producers. It has a daily output of more than 2 million barrels of oil and 3 billion standard cubic feet of gas. ADNOC plans to increase its crude production capacity to 5 million barrels per day by 2025. This is despite its CEO being the President of the 2023 United Nations Climate Change Conference (COP28).

Lukoil is a leader in the Russian oil and gas industry. It has been under US sanctions since 2014, when Russia annexed Crimea. Vagit Alekperov, the fifth richest person in Russia and a close supporter of Vladimir Putin, is the focus of current Western sanctions due to Russia's invasion of Ukraine. In April 2022, Alekperov stepped down as President of LUKOIL. He has remained a significant shareholder, though.

The LUKOIL-ADNOC-RDIF tripartite agreement

In addition to the LUKOIL-ADNOC deal, a tripartite framework Agreement on future cooperation in relation to the Ghasha concession was signed between LUKOIL, ADNOC, and the Russian Direct Investment Fund (RDIF) on October 15, 2019.

The LUKOIL-ADNOC-RDIF agreement was signed by Vagit Alekperov, Sultan Al Jaber, and RDIF CEO Kirill Dmitriev.

Al Jaber, Dmitriev and Alekperov presenting the tripartite Agreement to Putin and Al Nahyan (Credit: Lukoil Press Center)

The Russian government established the $10 billion Russian Domestic Investment Fund (RDIF) to facilitate co-investment in the Russian economy. Kirill Dmitriev is one of Putin's closest advisers. He is also the spouse and business partner of Putin's alleged girlfriend, Alina Kabaeva. Following Russia's invasion of Ukraine in February 2022, the US imposed sanctions on RDIF and Kirill Dmitriev. August 2022 saw the sanctioning of Alina Kabaeva.

The first time a Russian firm joined an ADNOC concession

Sultan Ahmed Al Jaber said, "We are very happy to partner with LUKOIL on this important project, which also marks the first time that we have partnered with a Russian energy company across our whole value chain." Additionally, we are happy to have reached a strategic framework agreement with RDIF and LUKOIL that expands on the award and presents opportunities for joint ventures with the concession in Ghasha. The concession award, as well as the framework agreement, reflects the strong and strategic bilateral ties between the UAE and Russia and highlights the important role of energy cooperation in strengthening the relations between our two countries."

"We are happy to partner with ADNOC and cooperate with RDIF in this project," said Vagit Alekperov. "The development of the Ghasha gas project is the first LUKOIL project in the UAE". "We are glad to enter the project in the UAE with such a significant resource base and with such experienced partners. Joining this project is fully consistent with our strategy."

"The large-scale project to develop the Ghasha concession opens up great investment opportunities for RDIF and LUKOIL," said RDIF CEO Kirill Dmitriev. "The agreement with Adnoc reflects a high level of energy cooperation with the UAE and confidence in the expertise of partners from the Russian Federation to help develop one of the major natural resources projects in the Middle East." (https://www.lukoil.com/PressCenter/Pressreleases/Pressrelease/lukoil-enters-the-ghasha-project-for-the)

COP28 President's commitment "to unlocking the UAE's abundant natural gas reserves"

Four artificial islands have already been completed in the Ghasha concession. Development drilling is underway. On July 22, 2022, ADNOC awarded $2 billion worth of drilling contracts. This was to spur the development of Hail and Ghasha's unit, ADNOC Drilling. ADNOC is dedicated to releasing the UAE's substantial natural gas reserves in order to promote industrial expansion, diversification, and domestic gas self-sufficiency, according to Sultan Al Jaber. As well as to meet growing global gas demand”.

Six months later, when Sultan Al Jaber was appointed Cop28 President, he retained his position at ADNOC. As head of COP28, he promises to accelerate an energy transition that "phases down the use of fossil fuels". As head of ADNOC, he pushes a completely opposite agenda. It has to increase ADNOC's crude production capacity to 5 million barrels per day and (in partnership with Lukoil). This is to increase its daily gas production by at least 40 million cubic meters. Both by 2025.

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