In a First, India Buys Stake in Abu Dhabi Oil Field

India signed five agreements during Prime Minister Narendra Modi’s visit to the United Arab Emirates, which saw New Delhi buying a stake in Abu Dhabi’s oil resources for the first time. Modi met Crown Prince of Abu Dhabi Mohamed bin Zayed Al Nahyan on Feb. 10 in the UAE capital, where buildings were lit up in Indian tricolor.

“We warmly welcome our state guest and valued friend, the Indian Prime Minister H.E.@narendramodi to the UAE. His visit reflects our longstanding historical ties and is testament to our friendly bilateral relationship,” Crown Prince Mohammed, also the Deputy Supreme Commander of the UAE Armed Forces, tweeted.

The Memorandum of Understandings (MoU) was signed between ONGC Videsh, Bharat PetroResources, Indian Oil and the Abu Dhabi National Oil Co (Adnoc) on Feb. 10 for the acquisition of 10 per cent participating interest in Abu Dhabi’s offshore Lower Zakum Concessions. The concession will be for 40 years from 2018 to 2057, and 60 per cent of the participating interest will be retained by ADNOC and remaining 30 per cent will be awarded to other international oil companies, a statement issued by the Indian embassy in Abu Dhabi said.

“This is the first Indian Investment in upstream oil sector of UAE, transforming the traditional buyer-seller relationship to a long-term investor relationship,” it added.

A participation fee of $600 million was paid by ONGC Videsh for the concession. The current production at the offshore is about 400,000 barrels a day and Abu Dhabi plans to increase the yield to 450,000 barrels a day by 2025. The deal is important since oil prices have increased again after the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC producers have come to an understanding about limiting outputs after last year’s supply glut decreased oil prices.

Other MoUs signed by the two governments include one that aims to institutionalize the collaborative administration of contractual employment of Indian workers in the Gulf country. India receives the most amount of remittances from UAE. Both of the countries will work to integrate their labor related e-platforms to end existing malpractices, combat trafficking and organize collaborative programs for education and awareness of contractual workers.

Another MoU was signed for technical cooperation in railways. “The MoU will facilitate development of joint projects, knowledge sharing, joint research and technology transfer. The MoU envisages formation of a Joint Working Group for institutionalizing the cooperation mechanism,” the statement said.

The Bombay Stock Exchange and Abu Dhabi Securities Exchange also signed an agreement to enhance cooperation between both the countries in financial services industry. Another MoU was signed between the government of Jammu and Kashmir and DP World to establish a multi-modal logistics park and hub in Jammu comprising warehouses and specialized storage solutions.