BP and ADNOC’s XRG bring new gas player into existence

Building upon their 50-year relationship, the UK-headquartered energy giant BP and the UAE-based ADNOC, through its recently established investment arm, XRG, have given birth to Arcius Energy, a new regional gas platform, with an initial focus on the development of gas assets in Egypt.

BP has taken several steps to bolster its asset portfolio, including the agreement from February 2024 to form a new joint venture (JV) with ADNOC in Egypt to grow a highly competitive gas portfolio. While the UK giant agreed to contribute its interests in two development concessions, alongside exploration agreements, to the new JV, ADNOC was to make a proportionate cash contribution for future growth opportunities.

The duo has now closed this deal, completing the formation of their new joint venture and international natural gas platform, named Arcius Energ, a JV owned by BP (51%) and XRG (49%), ADNOC’s low-carbon energy, natural gas, and chemicals investment company with an enterprise value of over $80 billion. The newly created joint venture player will combine its founding fathers’ technical capabilities and development track records as it aims to grow a highly competitive gas portfolio.

Murray Auchincloss, Chief Executive Officer (CEO) of BP, highlighted: “Arcius Energy brings together the strengths of our two companies to create a dynamic new platform for international growth in natural gas in the region. ADNOC, and now XRG, is a trusted partner, who we have worked with successfully for over five decades. Together, we can continue to build on BP’s 60 years of technical expertise and delivery of safe and efficient operations in Egypt – a hub for new opportunities to build out a highly competitive gas portfolio in the region.” 

Furthermore, Arcius Energy is set on pursuing natural gas growth to meet rising regional demand while supporting Egyptian energy security and economic development. Together with its partners, BP currently produces around 70% of Egypt’s gas through its gas development projects in the West and East Nile Delta.

The concessions assigned to the new firm in Egypt are Shorouk, which contains the producing Zohr field, operated by Eni through Belayim Petroleum (Petrobel) within the Egyptian Exclusive Economic Zone (EEZ) in the Mediterranean Sea; North Damietta with the producing Atoll field, operated through Pharaonic Petroleum Company (PhPC); and North El Tabya, Bellatrix-Seti East, and North El Fayrouz exploration concession agreements.

Dr. Sultan Ahmed Al Jaber, Executive Chairman of XRG, underlined: “The formation of Arcius Energy marks an exciting new chapter in our long-standing partnership with BP, and fully aligns with XRG’s objectives to accelerate the transformation of energy systems and build a world-scale integrated gas and chemicals portfolio to meet rising global demand. This progressive partnership will unlock a lower-carbon transition fuel to build a future where smarter, cleaner and more affordable energy is accessible for Egypt and the world.”

The BP-XRG JV is expected to assist Egypt in reaching its investment goal within the hydrocarbon exploration and field development arena to drill 586 oil and gas wells by 2030 while also taking advantage of opportunities in scaling up renewable energy deployment to bring further green power to its electricity grid. 

The senior leadership roles for Arcius Energy have been filled as part of the company’s formation, with Naser Saif Al Yafei being appointed as CEO while Katerina Papalexandri got the role of Chief Financial Officer (CFO). These executives, who come from ADNOC and BP, respectively, are perceived to bring decades of experience in the energy sector to the JV.

The two companies’ partnership spans many agreements, including the one from a few months ago, when the UK firm confirmed its intent to take a 10% interest in ADNOC’s planned Ruwais liquefied natural gas (LNG) project, subject to necessary approvals. The project, led by ADNOC with 60% interest, is envisioned to consist of two 4.8 million tons per annum (mtpa) liquefaction trains, to give a total capacity of 9.6 mtpa.

The two firms are among the founding members of the Oil and Gas Decarbonization Charter (OGDC), which was launched during COP28 in Dubai as a global commitment to speed up climate action across the energy industry.