LUKOIL Doubles Stake in UAE Offshore Energy Project
LUKOIL (MOEX: LKOH) has increased its stake in one of the UAE’s largest energy ventures — the offshore Hail & Ghasha concession — to 10%. This strategic acquisition, valued at $594 million, ranks among the largest international deals made by Russian oil companies in recent years. Experts describe the agreement as a rare instance of expanding global presence for Russian businesses since 2022.
Photo: Vitaly Nevar / Reuters
Austria’s OMV has sold a 5% stake in the Hail & Ghasha oil and gas project to LUKOIL, raising the Russian company’s total share in the Abu Dhabi offshore concession to 10%, OMV announced. The deal was valued at $594 million, excluding $100 million in transaction costs.
Awarded in 2018 with a 40-year term, the Hail & Ghasha concession includes the development of previously untapped deposits across nine offshore oil and gas fields in the Persian Gulf (Hail, Ghasha, Hair Dalma, Satah, Bu Haseer, Nasr, SARB, Shuweihat, and Mubarraz). The project is among the UAE’s most significant strategic gas initiatives and is expected to meet over 20% of the country’s natural gas demand—enhancing energy independence and security.
LUKOIL entered the project in 2019 by acquiring its initial 5% stake for $214 million.
The project operator remains ADNOC (Abu Dhabi National Oil Company) with a 55% stake. Other partners include Eni (25%) and PTTEP (10%), which acquired its share from Wintershall Dea in 2024. According to General Invest portfolio manager Tatyana Simonova, the price difference between LUKOIL’s two acquisitions reflects a change in project valuation. When LUKOIL first joined in 2019, the overall project value was lower. She also notes that in deals involving Wintershall Dea and Eni’s previous transfer of a 15% stake to ADNOC, estimated valuations were in the range of $1.5–1.6 per barrel of reserves, though no official deal values were disclosed.
Simonova highlights that, compared to these benchmarks, LUKOIL’s latest transaction appears approximately three times more expensive, based on a resource estimate of 2.5 billion barrels of oil equivalent. However, she cautions that the actual transaction price remains undisclosed, and project value may have increased over the past year as the first development phase nears completion.
Construction of the project involves building ten artificial islands, three of which have already been completed. Launch is expected in 2025.
The daily gas production of the project is forecast to exceed 1.5 billion cubic feet, with oil and condensate output reaching 120,000 barrels per day. Most of the natural gas will be used domestically in the UAE’s power generation, industrial, and utility sectors. Some resources may also be used for low-carbon hydrogen production and LNG exports.
Simonova says it’s still too early to assess production costs, as initial gas deliveries are not expected until 2025. However, LUKOIL will immediately benefit from a roughly 2% increase in its proven and probable reserves. She notes that reserves depletion is a relevant issue for the company, with proven reserves having declined by 3% in 2024.
Karen Dashyan of Advance Capital states that LUKOIL’s acquisition is the largest international deal by a Russian oil company in recent years. Since 2022, Russian energy majors have largely been divesting from overseas assets, so this move stands out as a positive signal. According to Dashyan, the $7-per-barrel oil equivalent valuation exceeds average market multiples.
Sergey Nunuparov of PSK-Solutions estimates that the $594 million price tag for the 5% stake implies a total project valuation of around $11.88 billion.
He calculates the total recoverable reserves at approximately 16 trillion cubic feet of natural gas and 1.3 billion barrels of oil and condensate. He adds that the price per barrel of oil equivalent in the transaction is roughly $2.92 — at the upper end of the typical 2024–2025 deal range of $2 to $3.10 per barrel.
Olga Semenovykh