Indian companies agreed to pay $600 million for a stake in one of Abu Dhabi’s biggest offshore oil concessions, securing a share in the emirate’s crude production for the first time.

State-owned Oil and Natural Gas Corp. and two other Indian companies will take a 10 percent share of the concession to pump crude from the Lower Zakum field, under a 40-year contract in partnership with Abu Dhabi National Oil Co., according to an Adnoc statement. Adnoc signed the deal during a visit of Indian Prime Minister Narendra Modi to the capital of the United Arab Emirates.

Abu Dhabi, which holds most of the U.A.E.’s oil reserves, is looking for new partners at its offshore fields in the Persian Gulf as the current production concession for some deposits expires next month. Partners in Abu Dhabi’s fields generally receive an amount of crude oil commensurate with their stakes in return for tax and royalty payments and investment to boost output.

The Indian companies will pay 2.2 billion dirhams ($600 million) to Abu Dhabi for their stake in the field, according to the statement. That puts the overall value of the concession at $6 billion. Adnoc, which retains 60 percent holdings in its fields, aims to award rights for an additional 30 percent of Lower Zakum as well as rights to two other offshore crude blocks.

The Indian consortium is comprised of ONGC’s wholly owned subsidiary ONGC Videsh, Indian Oil Corp., and Bharat PetroResources, which is a 100 percent subsidiary of Bharat Petroleum Corp., according to the Adnoc statement. Adnoc Offshore, a subsidiary of Adnoc, will operate the concession on behalf of all the partners.

Expanded production from its offshore reservoirs is part of Adnoc’s plans to raise its onshore and offshore output capacity to 3.5 million barrels a day by the end of 2018, according to the statement. Adnoc’s offshore fields currently produce about 1.4 million barrels a day, it said.

Source: Bloomberg

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