PETRONAS will hold 100 percent equity and operatorship to explore and appraise unconventional oil in the concession area for a period of up to six years
PETRONAS and Abu Dhabi National Oil Company (ADNOC) signed a historic deal for Abu Dhabi’s Unconventional Onshore Block 1 covering a 2,000 square km concession area in the Al Dhafra. The deal was signed under the presence of His Majesty Seri Paduka Baginda the Yang di-Pertuan Agong Al-Sultan Abdullah Ri’ayatuddin AlMustafa Billah Shah Ibni Almarhum Sultan Haji Ahmad Shah Al-Musta’in Billah, the King of Malaysia and President His Highness Sheikh Mohamed bin Zayed Al Nahyan.
The agreement was signed by UAE Minister of Industry and Advanced Technology and Managing Director and Group CEO of ADNOC, His Excellency Dr. Sultan Ahmed Al Jaber, and PETRONAS President and Group Chief Executive Officer, Datuk Tengku Muhammad Taufik, during Malaysian King’s visit to UAE. This deal marks the entry of a Malaysian company to invest explore for Hydrocarbons in Abu Dhabi, building on the strong bilateral ties between UAE and Malaysia.
According to the deal, PETRONAS will hold 100 percent equity and operatorship to explore and appraise unconventional oil in the concession area for a period of up to six years and following a fruitful appraisal phase, the partners can enter a production concession in which ADNOC has the option to hold a 50% stake, according to the official statement released by PETRONAS.
‘Following a successful appraisal phase, the parties can enter a production concession with a term of 30 years from the first award of the concession to PETRONAS, with ADNOC having the option to hold a 50% stake in the production concession. The block offers the potential to create significant in-country value for the UAE over the lifetime of the concession’ read the statement. Abu Dhabi’s unconventional recoverable oil resources are estimated at around 20 billion barrels of crude, comparable to ADNOC’s lower-carbon Murban grade. These externally verified resources have production potential matching the North American unconventional plays.
The concession award underlines the confidence in the potential of Abu Dhabi’s significant unconventional recoverable oil resource. Datuk Tengku Muhammad Taufik stated that this is a significant deal for the company.
“I am very pleased to note that the United Arab Emirates and Malaysia’s long and fruitful bilateral ties have progressed to a partnership between ADNOC and PETRONAS. PETRONAS is honored to have this opportunity to explore and appraise unconventional energy with a progressive and forward-looking partner such as ADNOC,” added Datuk Tengku Muhammad Taufik.
The concession award will facilitate PETRONAS’s ability to capitalize on ADNOC’s de-risking activities and earlier exploration. PETRONAS will bring the firm’s expertise in unconventional operations supporting g ADNOC and both firms have a great track record and are dedicated to providing responsible operations with low carbon gas and oil production.
His Excellency Dr. Sultan Ahmed Al Jaber stated that the award provides a new chapter of strategic energy and cooperation in the relationship between Malaysia and the UAE, reinforcing the United Arab Emirate’s position as a trusted investment destination. “As one of the least carbon-intensive oil and gas producers, ADNOC will continue to responsibly unlock value from Abu Dhabi’s vast hydrocarbon resources in a reliable and sustainable manner, to drive local economic growth and support global energy security, in line with the wise directives of the UAE’s leadership,” added Dr. Sultan Ahmed Al Jaber.
Taufik also added that the partnership bears evidence of unconventional expertise in Argentina and Canada which was developed in the last decade and the officials look forward to bringing the same experience to Abu Dhabi resources. “It will also see PETRONAS widen its global unconventional energy footprint to include the United Arab Emirates in its existing portfolio,” added Taufik. The agreement will see the Malaysian giant contributing and leveraging economically to ADNOC’s ongoing three-dimensional (3D) mega seismic survey which has already acquired seismic data within the concession area.