Abu Dhabi National Oil Company (Adnoc) awarded exploration rights for Abu Dhabi’s Offshore Block 3 to a consortium led by subsidiaries of Italy's Eni and Thailand's PTT Exploration and Production Public Company (PTTEP).
Eni will operate the exploration phase of the concession but PTTEP and Eni will collectively hold a 100 per cent stake in the exploration phase. They will invest up to Dh1.51 billion ($412 million) towards exploration and appraisal drilling, including a participation fee, to explore for and appraise oil and gas opportunities in Offshore Block 3, Adnoc said in a statement on Monday.
Offshore Block 3 covers an area of 11,660 square kilometres northwest of Abu Dhabi city. New 3D seismic data for a part of the block, which, combined with its proximity to existing onshore oil and gas fields, suggests the concession area has promising potential, Adnoc said.
Following successful commercial discovery during the exploration phase, Eni and PTTEP together will have the right to a production concession to develop and produce commercial discoveries. Adnoc has the option to hold a 60 per cent stake in the production phase of the concession. The term of the production phase is 35 years from the commencement of the exploration phase.
The concession “validates our targeted approach to value-add partnerships that contribute the right combination of capital, technology, capabilities and market access to accelerate the development of Abu Dhabi’s hydrocarbon resources", Dr Sultan Ahmed Al Jaber, UAE minister of industry and advanced technology and Adnoc Group chief executive, said.
“Despite volatile market conditions, we are making very good progress in delivering Abu Dhabi’s second competitive block bid round, underscoring our world-class resource potential and the UAE’s stable and reliable investment environment," he added.
"We continue to welcome partners that share our vision to sustainably unlock value from our hydrocarbon resources for our mutual benefit, as we deliver on our 2030 strategy and enable long-term returns to the UAE.”
As part of the exploration phase, Eni and PTTEP will also contribute financially and technically to Adnoc’s mega seismic survey, which is already acquiring seismic data within the block area. The world’s largest 3D seismic survey uses industry-leading technologies to capture high-resolution 3D images at ultra-deep locations below the surface and will be used to identify potential hydrocarbon reservoirs.
The agreement was approved by Abu Dhabi’s Supreme Petroleum Council (SPC) and comes after the award earlier this month of an onshore block to US-based Occidental Petroleum.
“Offshore Block 3 represents a challenging opportunity that can unlock significant value thanks to exploration and appraisal of shallow and deep reservoirs,” Claudio Descalzi, chief executive of Eni, said.
“This concession award offers another great opportunity for PTTEP to strengthen collaboration with world-class strategic partners Eni and Adnoc," PTTEP's chief executive Phongsthorn Thavisin said.
An Eni and PTTEP consortium was previously awarded two offshore blocks, Offshore 1 and Offshore 2, in Abu Dhabi’s first competitive bid round last year.
The new award comes about a month after the SPC announced the discovery of recoverable unconventional oil resources estimated at 22 billion stock tank barrels (STB) and an increase in conventional oil reserves of 2 billion STB, which boosted the UAE’s conventional reserves to 107 billion STB.
Earlier this month, Adnoc awarded Occidental exploration rights to Onshore Block 5 in a Dh514 million contract.
Adnoc launched Abu Dhabi’s second competitive block bid round in 2019, offering a set of major onshore and offshore blocks, which are estimated to hold multiple billion barrels of oil and several trillion cubic feet of natural gas.