State firm Mubadala is an increasingly key element of Abu Dhabi’s energy strategy, flexing its muscles after last year's merger with fellow state investment vehicle IPIC (MEES, 24 February 2017). A planned merger with $127bn Abu Dhabi Investment Council will provide more firepower.

The firm, chaired by Crown Prince Muhammad bin Zayid Al Nahyan has become an incubator for senior energy figures since its inception in 2002, with the UAE’s energy minister and state-firm Adnoc’s CEO coming through its doors (MEES, 8 April 2016).

Yet despite its pedigree, Mubadala has struggled to crack the upstream. A fragmented portfolio primarily focused on Asia and the Middle East fails to impress. IPIC brought its Spain-based 100% subsidiary Cepsa to the table, with 72,300 b/d of net entitlement 2016 output. But the joint portfolio lacked any stand-out performers. Half of Cepsa’s net output comes from its Algerian fields, with the declining Ourhoud field – 112,000 b/d gross for 2017, down from 220,000 b/d in 2010 – the key contributor.

All that changed last month when Mubadala Petroleum agreed a $934mn deal with Italy’s Eni for a 10% stake in Egypt’s 21.5tcf offshore Zohr gas field. Zohr came online in December 2017. Current output is 400mn cfd. Eni CEO Claudio Descalzi says it will ramp up to around 1.2bn cfd by mid-2018 (MEES, 16 February) and full plateau output of 2.7bn cfd by late 2019.

The deal came shortly after Cepsa ‘won’ a 20% stake in Adnoc’s newly formed Sarb & Umm Lulu concession, where output is planned to rise from 20,000 b/d to 215,000 b/d (MEES, 23 February). Cepsa paid $1.5bn, with Austria’s OMV (Mubadala 24.9%) set to pay the same for the remaining 20% available to IOCs (MEES, 6 April).

The Zohr deal solidifies Mubadala’s relationship with Eni. Eni lags behind Total, ExxonMobil and BP in Mena liquids production, and even further back in the Gulf given Eni’s traditional dominance in North Africa. But its two stakes in Abu Dhabi offshore, a 2017 MoU in June 2017 to boost output at Darquain in Iran, and a foray into Omani offshore exploration at Block 52, signal a greater Gulf presence—which Mubadala parlayed into an opportune investment in Egyptian gas.

Mubadala’s energy holdings are a complex web of interlocking assets. Its petroleum division has stakes in a variety of firms, and also contains Mubadala Petroleum which has direct upstream investments.

Since the IPIC merger, Mubadala’s petroleum and petrochemicals platform has invested $8bn upstream and downstream. CEO Musabbeh Al Kaabi puts Mubadala’s energy portfolio at around $40bn.

Until the Zohr deal is completed, Mubadala Petroleum’s key Mena assets are a 15% stake in the 120,000 b/d Mukhaizna heavy oil field (18,000 b/d net) and management of Mubadala's 51% stake in Dolphin Energy alongside Total and US firm Oxy (24.5% each). Dolphin provides piped gas from Qatar to the UAE and Oman, and continues to do so despite the UAE’s “embargo” on Qatar. Volumes have fallen of late, from 1.86bn cfd in 2017 to 1.49bn cfd in Jan-Feb 2018.

Mubadala Petroleum’s total working interest was 320,000 boe/d for 2017, level with 2016. The vast majority of this is of gas. By comparison, Kuwaiti compatriot Kufpec had 2017 output of just 82,000 boe/d (MEES, 13 October 2017).

Speaking at the Atlantic Council Energy Forum in Abu Dhabi in January, Mr Kaabi acknowledged that Mubadala’s portfolio is heavily weighted towards gas. But he argues that this complements Abu Dhabi’s situation as a net importer of gas: however, other than Dolphin, Mubadala’s assets don’t provide much gas for the UAE.

Given the revolving door between Mubadala and Adnoc, it is feasible that expertise gained from working at these international gas fields could be brought back to Abu Dhabi.

Charts included Zohr Field Stakes (%)

Charts included Sarab & Umm Lulu (%)

*Purchase from Eni Yet to be finalized


The $2.4bn spent in Egypt and Abu Dhabi exemplifies Mubadala’s broader push to expand its global presence. The bulk of Mubadala Petroleum’s assets are in Southeast Asia – Vietnam, Thailand, and Malaysia – but Mr Kaabi says the firm is now prioritizing “low-cost oil” over expensive investments demanding long-term cost recovery.

Mubadala Petroleum reached FID last month on Malaysia’s $1bn Pegaga offshore gas development along with partners Petronas (25%) and Shell (20%). Gas from a 550mn cfd processing platform will be piped to the Malaysia LNG plant at Bintulu. Significantly for Mubadala, the development project is a rare foray into upstream development as an operator.

The firm also last week signed a production sharing contract (PSC) with Indonesia for a 100% operating stake at Adnaman I. It has committed to conduct sub-surface studies and to acquire 3D seismic of the license over the next three years. Mubadala Petroleum also signed up to 30% of the adjacent Andaman II license which is operated by UK independent Premier Oil.

Mubadala says the two blocks, located in the North Sumatra basin offshore Aceh, “have the potential to unlock a new material gas play for domestic consumption in North Sumatra and indeed long term export to regional markets.”

Mr Kaabi says he is a “big believer in the downstream and petchems” and is certainly busy on the downstream side. In January he described petrochemicals as “an enabler for the new industrial revolution.”

In February Total and two of Mubadala’s subsidiaries (Austria’s Borealis and Canada’s Nova Chemicals, together ‘Novealis Holdings’) agreed to form a JV to produce petchems on a 50:50 basis (MEES, 2 March). The $1.7bn venture is centered on a 1mn t/y ethane cracker at Port Arthur, Texas, which is due to come online in 2020 processing locally-produced shale gas.