OMV CEO Rainer Seele spoke to CNBC’s Hadley Gamble shortly after the announcement, emphasizing the importance of a diversified project portfolio in an environment of lower oil prices.
“You should not only put one card into your portfolio. So we are investing into the gas value chain, we’re investing into petrochemicals, and we have certainly reduced our dependency on the oil price volatility,” Seele said, speaking from Abu Dhabi. Crude prices have fallen some 30 percent since hitting year-highs in mid-October, and forecasters expect the commodity to stay under pressure due to global oversupply and slowing demand.
“That is the reason we are targeting a cooperation with ADNOC on an integrated level. If you see weakness in upstream (exploration and production) because of low oil prices, you can benefit with lower feedstock costs in downstream,” Seele said, referring to the end of the oil supply chain which includes oil refineries, petrochemical plants, petroleum products distributors, retail outlets and natural gas distribution companies.
“That is why the integrated cooperation brings you the most stability in any kind of cooperation.”
The 40-year concession agreement with OMV, in addition to those recently signed with ENI and Wintershall, “underscores ADNOC’s commitment to maximizing value from Abu Dhabi’s substantial gas resources and to ensuring a sustainable and economic supply of gas, in line with the leadership’s directives,” Sultan Ahmed Al Jaber, the UAE’s minister of state and ADNOC Group CEO, said in a statement.
The recent deals follow ADNOC’s awarding of a 40 percent stake to French oil major Total, also in November, to explore and develop in “unconventional reservoirs” in Ruwais Diyab, a large area west of current production.
The UAE already accounts for 3.1 percent of global proven natural gas reserves. In early November it announced the discovery of some 15 trillion cubic feet of the cleaner fuel in both untapped and existing blocks, which would increase its current gas reserves by 7.1 percent, according to statistics from BP. The UAE’s gas reserves were reported at 209.7 trillion cubic feet in 2017.