Adnoc awards two offshore exploration blocks in first-ever competitive bid

Adnoc is engaging with foreign partners to help boost its oil and gas production capacities. Photo courtesy of Adnoc

Abu Dhabi National Oil Company awarded two offshore exploration blocks to a consortium led by Eni of Italy and PTT Exploration and Production Public Company of Thailand in its first-ever competitive bid round.

The consortium will invest at least Dh844 million to explore and appraise the two blocks that cover a combined area of about 8,000 square kilometres, Adnoc said in a statement on Saturday. Under the agreement, Eni will operate the concessions, while both firms will hold a 100 per cent stake during the exploration period.

“These historic agreements on the first blocks to be awarded, following a competitive bidding process, represent a major advancement in how Abu Dhabi and Adnoc unlocks and maximises value from its substantial hydrocarbon resources, in line with the leadership’s directives,” said Dr Sultan Al Jaber, group chief executive of Adnoc.

Adnoc launched the competitive bid in April last year for six oil and gas blocks as part of plans to seek new partners in exploring for hydrocarbon deposits.

The state-owned company was busy last year awarding stakes to international oil companies in developing concessions amid a strategy to engage with foreign players to unlock its reserves.

"The awards underline Adnoc’s 2030 smart growth strategy and our targeted approach to engage with value-add partners who can contribute the right combination of capital, technology and capabilities to accelerate the development of Abu Dhabi’s hydrocarbon resources," said Dr Al Jaber.

Eni and PTTEP will explore for oil and gas, and appraise the existing discoveries in Offshore Block 2 while the exploration and appraisal plans for the Offshore Block 1 will be finalised, Adnoc added.

If exploration leads to commercial discoveries, the two companies will be able to hold a 40 per cent stake in the concessions to develop them.

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"Upon successful exploration – and having established the commerciality of the discovered resources – Eni and PTTEP will, together, be granted the opportunity to develop and produce any discoveries, with Adnoc retaining the option to hold a 60 per cent stake in the production phase," the statement said.

The two offshore blocks are part of a 53,000 square kilometre area that is being explored through the world’s largest continuous 3D onshore and offshore seismic survey.

Adnoc is ramping up its exploration activities as it seeks to become self-sufficient in gas and later export the fuel. Plans are also underway to boost the company's oil production to 5 million barrels of oil per day by 2030 from about 3 million bpd now.

Abu Dhabi's Supreme Petroleum Council approved last year a five-year capital expenditure plan of Dh486 billion for Adnoc to increase oil capacity and unlock its sour gas caps, among other activities.

Some of the blocks that are part of the competitive bid already have discoveries, according to Adnoc.

"In addition to the country’s conventional oil and gas accumulations, some of the offered blocks also contain significant unconventional resource potential," said Adnoc.

This is not the first time that Eni has won concessions in Abu Dhabi.

Last year Eni won a 10 per cent stake in the Umm Shaif and Nasr Offshore concession and a 5 per cent stake in the Lower Zakum concession, making it the first Italian company to clinch such deals in Abu Dhabi's oil and gas sector. Eni also won last year a 25 per cent stake in the Ghasha ultra sour gas concession.

"In addition, the award of a share of the two offshore blocks to Eni provides the Italian company with an opportunity to leverage potential synergies with the neighboring Ghasha Concession," said Adnoc on Saturday.