Adnoc says US supermajor ExxonMobil and Japan’s Inpex had been granted a 10-year extension to their concession for the Upper Zakum offshore oil field as part of an agreement to raise crude production capacity from the giant field to 1 mbpd

Abu Dhabi National Oil Co (Adnoc) has announced that it would expand crude production capacity by a combined 280,000 barrels per day from two of its most prized fields in a move that could raise the state giant’s overall production capacity beyond its official 3.5 mbpd target.

Adnoc says US supermajor ExxonMobil and Japan’s Inpex had been granted a 10-year extension to their concession for the Upper Zakum offshore oil field as part of an agreement to raise crude production capacity from the giant field to 1 mbpd by 2024. Exxon and Inpex, which hold 28 per cent and 12 per cent stakes respectively in the Upper Zakum concession alongside Adnoc with 60 per cent, are presently working on boosting output from the field to 750,000 bpd by 2018 from around 700,000 bpd now.

Adnoc also announced that it had awarded an engineering, procurement and construction (EPC) contract to China Petroleum Engineering & Construction Corporation (CPECC) to raise oil production capacity at another massive field, onshore Bab, to a sustainable level of 450,000 bpd from 420,000 bpd by 2020. Work on Bab will increase water and gas handling capabilities and deliver an additional degassing and processing train in addition to upgrading the oil production operations, Adnoc says.

Abu Dhabi, which produces almost all the crude in Opec member United Arab Emirates, is presently working toward raising oil production capacity to 3.5 mbpd by no later than 2019. It is unclear whether Adnoc’s official production capacity target will be amended upward as a result of the latest expansion plans.

Adnoc CEO Sultan Al Jaber says that all company targets, including oil production capacity, would be revisited as part of the strategic overhaul initiated at the state firm since he took over the top post in early 2016.

"What sits at the heart of our DNA is our ability to be agile and resilient to market dynamics. Even though we set targets, that doesn’t mean that we will not be revisiting those targets—given, of course, that we are working within a framework that adheres to the policies communicated by Opec," Al Jaber says at the time.

"But at the same time, we will not ignore market opportunities. We will always adopt a very agile approach in delivering against our targets," he says.

In the announcements, Adnoc says the Upper Zakum concession would now expire 10 years later than previously planned on December 31, 2051. It is the concession’s second extension since 2014, when Abu Dhabi agreed to lengthen it by 15 years until Dec. 31, 2041.

Under the new fiscal terms agreed at the time, Abu Dhabi also raised the amount Exxon and Inpex get paid to $2.85 per barrel from the previous $1. Adnoc didn’t say whether fiscal terms had been adjusted this time around.

Adnoc says the concession extension was part of its efforts to strengthen partnerships that bring technology, expertise and market access, and is an important step toward delivering on its 2030 "smart growth strategy" aimed at creating a more profitable upstream business by raising crude production capacity and reducing cost.