While the US and its Western allies have sanctioned Russia in response to the illegal annexation of Crimea and the invasion of Ukraine, Russian entities have found new and generous business partners in the UAE. Lukoil, Russia's second-largest oil producer, under US sanctions since 2014, is part of the ADNOC-led joint venture that develops UAE's largest-ever gas project.
"Western sanctions failed again"
"ADNOC made an investment decision on gas fields on the UAE shelf with the participation of LUKOIL," Russian news agency Interfax announced on October 5, 2023. (https://www.interfax.ru/) The news was widely shared by Russian media and propaganda machinery, which have been struggling to convince that the international community's efforts to isolate Russia have failed.
"ADNOC to develop two oil gas deposits in Abu Dhabi with LUKOIL," headlined Russia's leading business news agency Prime in a newswire (https://1prime.ru/). "Western sanctions and the desire to isolate Russia once again led nowhere," explained Energy and Industry of Russia, announcing that "LUKOIL will participate in the development of oil and gas fields in the UAE" (https://www.eprussia.ru/).
Russian media's enthusiastic report refers to an announcement by energy giant Abu Dhabi National Oil Company (ADNOC) on October 5, 2023. The state-owned oil company of the United Arab Emirates said it had awarded $16.9 billion contracts for construction work on the Ghasha mega-project site, the world's largest offshore sour gas development. The announcement came under the framework of ADIPEC, UAE's annual oil and gas conference, and weeks ahead of COP28, the UAE-hosted UN climate conference. Incidentally, the ADIPEC host, ADNOC CEO, and COP28 President are the same person: Sultan Al Jaber.
The ADNOC-LUKOIL joint venture
Sultan AL Jaber is also the CEO of the joint venture that holds the Ghasha concession.
As revealed by OSI https://www.opensourceinvestigations.com/, ADNOC awarded Russian oil and gas company LUKOIL a 5% stake in the Ghasha concession during Putin's visit to the UAE in October 2019. "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. The document was signed by Vagit Alekperov, Co-founder, President, and CEO of LUKOIL, and Sultan Ahmed Al Jaber, CEO of ADNOC.
Sultan Al Jaber and Vagit Akperov presenting the ADNOC-LUKOIL Agreement to Vladimir Putin and Mohamed bin Zayed Al Nahyan. (Credit: Lukoil Press Center)
At the time of the signing, LUKOIL was already under US sanctions. LUKOIL has been subject to 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 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 daily and 120,000 barrels per day of crude oil and gas condensates a day by around 2025. LUKOIL's share in the concession will make approximately 300,000 tons of oil and 730 million cubic meters of gas annually.
Next to ADNOC and LUKOIL, other partners in the Concession are Italian ENI, German Wintershall Dea, and Austrian OMV. ADNOC holds a 55 percent stake in the Ghasha concession.
Russian Domestic Investment Fund (RDIF), a sovereign wealth fund created by the Russian government, is also involved in the Ghasha project. In addition to the LUKOIL-ADNOC deal, a tripartite framework Agreement on future cooperation concerning the Ghasha concession was signed by the CEOs of LUKOIL, ADNOC, and the RDIF on October 15, 2019. The CEO of RDIF, Kirill Dmitriev, is one of Putin's closest advisers.
