Abu Dhabi National Oil Company (Adnoc) and Malaysian state giant Petronas have signed a landmark deal for the exploration and appraisal of Abu Dhabi’s first onshore unconventional oil block.
Petronas confirmed the development on Monday and said the agreement involves Abu Dhabi’s Unconventional Onshore Block 1, which covers a 2000 square-kilometre concession area in the Al Dhafra region.
The deal was signed by Petronas group chief executive Tengku Muhammad Taufik and Adnoc group chief executive Sultan Ahmed Al Jaber.
“Petronas will hold 100% equity and operatorship to explore and appraise unconventional oil in the concession area for a period up to six years,” the company noted.
United Arab Emirates state-run news agency WAM said that “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,” WAM stated.
The agreement will see Petronas leverage and contribute financially to Adnoc’s ongoing three-dimensional mega seismic survey, which has already acquired data within the concession area.
Huge unconventional resources
Abu Dhabi’s unconventional recoverable oil resources are estimated at 22 billion barrels of very light and sweet crude, comparable to Adnoc’s flagship lower-carbon Murban grade, according to the UAE company.
Taufik noted that the “United Arab Emirates and Malaysia’s long and fruitful bilateral ties have progressed to a partnership between Petronas and Adnoc”.
“This partnership bears strong testament our deep unconventional expertise in Canada and Argentina, which we developed over the last decade, and we look forward to bringing this experience to the world-class resources in Abu Dhabi,” he said.
The Petronas chief executive added that the deal would enable his company to “widen its global unconventional energy footprint to include the United Arab Emirates in its existing portfolio”.
Al Jaber said the “award ushers a new chapter of strategic energy cooperation in the longstanding relationship between the UAE and Malaysia, and it reinforces the UAE’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,” he said.
“As such, we have driven the de-risking of Abu Dhabi’s unconventional oil resources and look forward to building on this with Petronas to realise the full potential of Unconventional Onshore Block 1.”
Abu Dhabi has been scaling up its investments in unconventional oil and gas assets, where it sees a strong upside in terms of production potential.
The company earlier this year told Upstream that it is gearing up to tap its estimated 22 billion barrels of unconventional oil resources and believes its production potential is comparable to the most prolific North American shale plays.
A senior Adnoc executive earlier said the company is engaging with potential international partners and operators that can “bring the right mix of unconventional oil expertise, technology and capital” to support the development of its unconventional oil resources.
Adnoc is hoping its drive for unconventional oil resources will be spurred on by its initial success with unconventional gas at the Ruwais Diyab concession, where its joint venture with TotalEnergies delivered first gas in 2020.
Adnoc and Total (now TotalEnergies) formed the joint venture in November 2018, with the French supermajor holding a 40% stake and acting as operator during the exploration period at Ruwais Diyab, which covers more than 6000 square kilometres west of the emirate’s main Adnoc Onshore concession.
Adnoc sees first gas at Ruwais Diyab as a key “significant milestone towards its future full field development” and towards company’s target of producing 1 billion cubic feet per day of gas from the concession before 2030.