UAE’s ADNOC buys stake in Azerbaijan gas field

The United Arab Emirates’ state-owned oil energy company announced on Friday a major investment in Azerbaijan, further demonstrating the UAE’s commitment to gas amid its push toward renewable energy.

The Abu Dhabi National Oil Company (ADNOC) signed a deal with Azerbaijan’s state energy company, SOCAR, and France’s TotalEnergies to acquire a 30% stake in the Absheron gas field, in the Caspian Sea. After the transaction, SOCAR and TotalEnergies will each own a 35% stake in the field, ADNOC said in a press release.

"ADNOC’s investment into the Caspian region aims to create a substantial growth position as it enters the international gas market, and reinforces the energy partnership between the United Arab Emirates (UAE) and Azerbaijan,” said the company.

ADNOC executive Musabbeh Al Kaabi added that the move is in response to the rising global demand for gas, according to the release.

ADNOC did not disclose the financial terms of the acquisition.

Why it matters: The deal represents ADNOC’s growing interest in investment outside the UAE. In March, ADNOC and British Petroleum (BP) made an offer to buy a stake in Israel’s NewMed Energy. ADNOC also bought a stake in the Austrian oil and gas firm OMV from the UAE’s sovereign wealth fund, Mubadala, in December. The Azerbaijan deal is ADNOC’s first investment in production outside the UAE, according to Bloomberg.

The agreement also demonstrates the UAE’s commitment to gas although the Gulf state continues to pursue diversification, renewable energy and the like. In January, ADNOC said it had allocated $15 billion to various forms of green technology, including carbon capture. ADNOC has also worked previously with TotalEnergies to this end, with the two entities signing a cooperation deal on carbon capture last year.

In November, the UAE will host the United Nations Climate Change conference, COP28.

Azerbaijan is already tied to the UAE's renewable energy push. In June of last year, the Emirate's government-owned renewable energy company Masdar signed a deal to develop wind and solar energy projects in Azerbaijan.

Know more: Gulf states are increasingly using renewable energy in oil and gas production processes, and the UAE is particularly interested in developing solar and hydrogen energy, as Gulf scholar Karen Young wrote in a memo for Al-Monitor PRO last month.