Abu Dhabi National Oil Company awarded Occidental Petroleum onshore exploration rights in a Dh514 million ($140m) contract as the UAE energy giant accelerates the development of Abu Dhabi’s hydrocarbon resources.
The 35-year concession for onshore Block 5 is the first Adnoc has awarded following the successful completion of its second bid round. Last month, Abu Dhabi's Supreme Petroleum Council gave the green light for Adnoc to begin awarding exploration blocks.
Occidental, a major player in the Permian Basin in the US, will hold a 100 per cent stake in the exploration phase, investing Dh514m "to explore for and appraise oil and gas opportunities", Adnoc said in a statement on Wednesday.
"Occidental was selected after a very competitive bid round that builds on the success of our debut bid round completed last year as part of Abu Dhabi’s block licensing strategy aimed at accelerating the exploration and development of our substantial hydrocarbon resources," Adnoc group chief executive Dr Sultan Al Jaber said in a statement.
"The award underscores the attractiveness of Abu Dhabi’s huge untapped resource potential and Adnoc's ability to continue to secure foreign direct investment to the UAE’s stable and trusted business environment, despite tough market conditions," Dr Al Jaber, who is also the UAE minister for industry and advanced technology, added.
The concession awarded to Occidental covers an area of 4,212 square kilometres south-east of Abu Dhabi city. Onshore Block 5 offers new areas with "significant amounts of conventional oil and gas potential", Dr Al Jaber said.
The block's proximity to existing oil and gas fields suggests "promising potential" according to new 3D seismic data acquired over the area.
The US oil company will have the right to develop and produce any successful commercial discovery following the exploration phase. Adnoc will have the option to hold a 60 per cent stake in the production phase of the concession.
Adnoc launched its second licensing round in May 2019, offering five blocks, stretching across an area of around 34,000 square kilometres.
Adnoc – in pictures
Offshore Blocks 3, 4 and 5, as well as onshore Blocks 5 and 2 were part of the bid round, with the latter offering two separate licensing opportunities for conventional and unconventional hydrocarbons.
Last month, Adnoc announced substantial recoverable unconventional oil resources onshore, estimated at 22 billion barrels. There was also an increase of 2 billion barrels in conventional oil reserves, which maintains the UAE's position as the holder of the world's sixth-largest oil reserves. The country accounts for 5.6 per cent of the world's proven oil reserves.
Adnoc also plans to spend $122 billion over the next five years, in upstream exploration as well as downstream expansion.
The award of Block 5 is the second such win for Occidental in Abu Dhabi. The Houston-headquartered company was awarded a 35-year contract for onshore Block 3 last year for Dh893m.
Vicki Hollub, president and chief executive of Occidental, said the company has completed "two exploration wells with extremely promising results", in Block 3.
"We see significant potential in onshore Block 5 and, in partnership with Adnoc, will continue to work to help unlock the vast untapped resources in Abu Dhabi," she said.
Occidental will also contribute "financially and technically" to Adnoc's large seismic survey, which covers data from within the block area.
Last month, Adnoc awarded BGP, a subsidiary of China National Petroleum Company, a $519m contract to expand the scope of the world’s largest combined seismic survey to discover new oil and gas resources.
The survey can capture 3D images of complex geology 25,000 feet below the earth's surface, Adnoc said.