Abu Dhabi: India and the UAE on Saturday signed a concessional agreement awarding a consortium of Indian oil companies, led by the ONGC, a 10 per cent stake in Abu Dhabi's offshore oil concession, the first such deal for the Indian oil and gas companies in the Gulf nation.

Prime Minister Narendra Modi, Crown Prince of Abu Dhabi Sheikh Mohamed bin Zayed Al Nahyan and Deputy Supreme Commander of the UAE Armed Forces witnessed the signing of the historic agreement.

The MoU between Indian consortium (OVL, BPRL and IOCL) and state-run Abu Dhabi National Oil Company (ADNOC) was signed for acquisition of 10 per cent participating interest in the offshore Lower Zakum Concession.

The concession will be for 40 years from 2018 to 2057.

Sixty per cent of the participating interest will be retained by ADNOC and remaining 30 per cent will be awarded to other international oil companies.

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

Lower Zakum is one of three new separate concession areas that make up the former ADMA offshore concession, namely Lower Zakum, Umm Shaif and Nasr and Sateh Al Razboot (SARB) and Umm Lulu.

Speaking at the signing of the agreement, Prime Minister Modi said, "The offshore concession in favour of the Indian consortium has taken our bilateral engagement in the oil and gas sector to a new level, which befits the comprehensive strategic partnership between our two countries."

"I am happy to note that we have progressed from a buyer-seller relationship to an era of mutual investments in the oil and gas sector," he said.

The consortium, led by India's ONGC Videsh, contributed a participation fee of AED 2.2 billion (USD 600 million) to enter the concession.

The concession will be operated by ADNOC Offshore, a subsidiary of ADNOC, on behalf of all concession partners.

The agreement, which has a term of 40 years and an effective date of March 9, 2018, was signed by Sultan Ahmed Al Jaber, ADNOC Group Chief Executive Officer, and member of Abu Dhabi's Supreme Petroleum Council and Shashi Shanker, Chairman, ONGC Group of companies.

"Our strategic partnership with ONGC, and the other members of the consortium, marks a new chapter in the strategic and economic relationship between the UAE and India.

"This mutually beneficial partnership will help India meet its growing demand for energy and refined products, create opportunities for ADNOC to increase its market share in a key growth market, and build a solid foundation as ADNOC explores potential international investments, particularly focused on downstream opportunities," said Al Jaber, who is also Minister of State in the UAE.

"This agreement demonstrates the confidence of the international market in ADNOC's long-term production targets and ADNOC's strategy to maximise economic value and recovery from its offshore oil and gas resources. This is an attractive and strategic agreement for both parties that will deliver competitive returns and long term growth opportunities."

The Indian consortium is made up of ONGC's whollyowned subsidiary ONGC Videsh, which has stakes in 39 oil and gas projects, in 18 countries; the Indian Oil Corporation, India’s largest commercial enterprise, encompassing the entire hydrocarbon value chain.

The ONGC caters to nearly half of India's petroleum consumption with 11 of India's 23 refineries a 13,000-km pipelines network and a countrywide marketing set-up of over 47,000 customer touch-points, and Bharat PetroResources, which has stakes in 23 oil and gas assets in seven countries and is a 100 per cent subsidiary of Bharat Petroleum Corporation Limited which has interests encompassing the entire hydrocarbon value chain.

Shanker, said, "We are delighted to be chosen by ADNOC to participate in this important offshore concession. This historic agreement will lead to further opportunities for Indian oil and gas companies to participate in the UAE’s energy sector.”

Indian energy demand is forecast, by the International Energy Agency (IEA), to grow by more than any other country in the period to 2040, propelled by an economy that will grow to more than five-times its current size and by population growth that will make it the world’s most populous country.

Indian energy consumption is expected to more than double by 2040, accounting for 25 per cent of the rise in global energy in the same period, and the largest absolute growth in oil consumption.

Today, India is 79 per cent dependent on imports to meet its crude oil needs, 8 per cent of which is supplied by the UAE.

Alongside the concession award, ADNOC and the Indian Strategic Petroleum Reserves Ltd (ISPRL) exchanged agreements, today, to implement the strategic crude oil storage facility, in the southern Indian city of Mangalore.

The partnership with ISPRL, an Indian governmentowned company mandated to store crude oil for strategic needs, covers the storage of 5.86 million barrels of ADNOC crude oil in underground facilities, at the Karnataka facility.

The oil storage facility will help ensure India’s energy security, as well as enable ADNOC to efficiently and competitively meet market demand in India and across the fast developing south east Asian economies.

The decision to establish the strategic reserve was announced, in January 2017, during a visit to India by Sheikh Mohamed bin Zayed.