VZCZCXRO4327
PP RUEHDE
DE RUEHAD #1219 0871354
ZNR UUUUU ZZH
P 281354Z MAR 06
FM AMEMBASSY ABU DHABI
TO RUEHC/SECSTATE WASHDC PRIORITY 4233
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RHEHNSC/NSC WASHDC
RHEHAAA/WHITE HOUSE WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC

UNCLAS ABU DHABI 001219 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR NEA/ARPI, EB/ESC/IEC/EPC 
NSC FOR HUTTO 
ENERGY FOR MOLLY WILLIAMSON, AND DAS BRODMAN 
OVP FOR KEVIN O'DONOVAN 
STATE PASS USTR FOR AUSTR DONNELLY AND BELL 
 
E.O. 12958: N/A 
TAGS: EPET ENRG EINV AE
SUBJECT: EXXON GETS 28% OF UPPER ZAKUM 
 
REF: ABU DHABI 470 
 
This cable contains business proprietary information. 
 
¶1. (U) On March 27, Exxon Mobil signed agreements with the 
Emirate of Abu Dhabi's Supreme Petroleum Council and the Abu 
Dhabi National Oil Company (ADNOC) for a 28% stake in the 
Upper Zakum field as of January 1, 2006.  ADNOC's stake in 
the field drops from 88% to 60% and the Japan Oil Development 
Company (JODCO) keeps its 12% share.  Under the terms of the 
agreement, Exxon Mobil and JODCO will have a 20 year 
concession in the field.  ADNOC's goal is to increase the 
field's sustainable production capacity to 750,000 barrels 
per day (b/d) from its current capacity of around 520,000 b/d 
"once all the technical studies are completed."  Exxon Mobil 
also committed to establishing a technology center in Abu 
Dhabi to apply the most advanced reservoir management, well 
management, and production operations technology to Upper 
Zakum.  Exxon Mobil also committed to providing training as 
part of its package, including by assisting in establishing a 
specialized research and development facility at Abu Dhabi's 
Petroleum Institute. 
 
¶2. (SBU) On March 28, EconChief called Frank Kemnetz, 
President of Exxon Al-Khalij (Exxon Mobil's subsidiary) to 
congratulate him on a successful deal and to ask about next 
steps.  Kemnetz explained that Exxon Mobil would study the 
field before determining -- in consultation with JODCO and 
ADNOC -- a sustainable level of production.  He emphasized 
that, while the oil resources were in the field, it would 
"take work to produce."  In response to Econchief's question, 
Kemnetz confirmed that ADNOC was not interested in high rates 
of production if they led to a rapid decline in a field's 
production capacity.  (Note:  Upper Zakum is an offshore 
super giant field, with an estimated 50 billion barrels in 
place, with less than 5 percent of the resource produced to 
date according to Exxon Mobil's public estimates. End Note.) 
 
¶3. (SBU) Comment:  This has been a long process for Exxon 
Mobil since ADNOC put the development of Upper Zakum out for 
bid in 2002.  The 28 stake in Upper Zakum will significantly 
increase the company's presence in Abu Dhabi's upstream oil 
industry and demonstrates ADNOC's preference for U.S. 
technology and management expertise.  End Comment 
SISON