ADNOC awarded two offshore blocks to a consortium led by Eni and Thailand’s PTTEP that will see the international companies invest AED 844 million (US$230 million) to explore for oil and gas.
The two blocks in the northwest of Abu Dhabi – Offshore 1 and Offshore 2 – are the first blocks to be awarded among the geographical areas that were offered for commercial bidding by ADNOC, in April 2018, as part of Abu Dhabi’s first competitive open block licensing strategy.
Eni will operate the concessions and PTTEP (PTT Exploration and Production Public Company Limited) and Eni will both hold a 100 per cent stake in the exploration phase, investing at least AED 844 million (US$230 million) to explore for oil and gas, and appraise the existing discoveries in Offshore Block 2, ADNOC stated the terms of the deal in a statement.
At the same time, the exploration and appraisal plans for the Offshore Block 1 will be finalised. The two blocks cover a combined area of approximately 8,000 square kilometers.
Upon successful exploration – and having established the commerciality of the discovered resources – Eni and PTTEP will, together, be able to develop and produce any discoveries, with ADNOC retaining the option to hold a 60 percent stake in the production phase.
The concession agreements were signed by His Excellency Dr. Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO; Claudio Descalzi, CEO of Eni; and Phongsthorn Thavisin, President and Chief Executive Officer of PTTEP.
H.E. Dr. Al Jaber said: “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 maximizes value from its substantial hydrocarbon resources, in line with the leadership’s directives.
“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 as the company strives to deliver long-term and sustainable returns to the UAE and continues to reliably respond to the world’s growing needs for energy.
“These awards build on ADNOC’s and Eni’s growing partnerships on various fronts, broaden and reinforce ADNOC’s strategic partnership base as we add, for the first time, Thailand’s PTTEP, and reinforces the confidence the international community places on the UAE’s stable and secure and investment environment.”
The awards follow the Supreme Petroleum Council’s approval of ADNOC’s new integrated gas strategy and the company’s plans to increase its oil production capacity to 5 million barrels per day (mmbpd) by 2030. The strategy is designed to unlock and maximise value from Abu Dhabi’s substantial oil and gas reserves and enable the UAE to achieve gas self-sufficiency and potentially transition to a net gas exporter.
Descalzi said: “This award represents a new important step towards Eni’s expansion in one of the world’s leading regions for the oil and gas industry, not only by participating in producing fields, but also by exploring new blocks. In particular, Block 1 and 2 are extremely important, thanks to the virtuous synergies they will have with Ghasha concession projects. This further reinforces the partnership between Eni and ADNOC, and Eni will make available its exploration expertise and leading-edge technology to untap additional resources in the offshore of Abu Dhabi.”
Thavisin said: “We are excited and enthusiastic to establish our first-ever presence in the UAE by investing in Offshore 1 and Offshore 2 blocks. This achievement opens windows of opportunity for us to collaborate with world-class oil and gas companies – ADNOC and Eni – and to invest in one of the world’s prolific areas of oil and gas resources. We believe the consortium will bring capabilities, experience and technology to develop these exploration blocks and that the partnership will create long-term value for all involved parties.”
The exploration phase will also see Eni and PTTEP leverage – and contribute financially and technically to – ADNOC’s mega seismic survey that is deploying industry-leading technologies to capture high-resolution three-dimensional (3D) images of complex subsurface structures, up to 25,000 feet, which will be used to identify potential hydrocarbon reservoirs. In July 2018, ADNOC awarded AED 5.88 billion (US $1.6 billion) contracts to carry out the world’s largest continuous 3D onshore and offshore seismic survey, covering an area up to 53,000 square kilometers, including the area containing the two offshore blocks awarded to Eni and PTTEP. 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 in which Eni was awarded a 25 percent share in November 2018.
Earlier in 2018, ADNOC also awarded Eni a 10 percent stake in the Umm Shaif and Nasr Offshore concession and a 5 percent stake in the Lower Zakum concession. These awards marked the first time an Italian energy company was granted concession rights in Abu Dhabi’s oil and gas sector.
The remaining geographical areas within Abu Dhabi’s first competitive block bid round, which are all onshore, will be awarded at a later date.