Abu Dhabi’s National Oil Company (Adnoc) has awarded a key offshore exploration block to Japan’s Cosmo Energy Holdings, as a part of its second licensing round that was launched in 2019.
The state-owned giant said on Wednesday it has awarded the exploration rights for Abu Dhabi’s Offshore Block 4 to Cosmo E&P Albahriya, which is a wholly owned subsidiary of Japan’s Cosmo Energy Holdings.
“The award has been approved by Abu Dhabi’s newly formed Supreme Council for Financial & Economic Affairs (SCFEA) and marks the first of such awards endorsed by the SCFEA,” Adnoc added.
It follows the awards of two additional exploration tracts by Adnoc in December.
The company had earlier awarded a consortium of Italy’s Eni and Thailand’s PTTEP the exploration rights for Offshore Block 3.
In addition, it also signed an exploration concession agreement last year with US independent Occidental Petroleum for Onshore Block 5 as a part of the second licensing round.
Cosmo will hold a 100% stake in Block 4's exploration phase, "investing up to $145 million towards exploration and appraisal drilling, including a participation fee", Adnoc said.
In case of a commercial discovery, “Cosmo will have the right to a production concession to develop and produce such commercial discoveries", Adnoc added.
“Adnoc has the option to hold a 60% stake in the production phase of the concession."
The term of the block’s production phase will be for a period of 35 years from the commencement of the exploration phase.
Offshore Block 4 covers an offshore area of 4865 square kilometers north-west of Abu Dhabi city.
Adnoc in 2019 launched its second licensing round, offering three offshore and two onshore blocks, which it said are likely to hold “multiple billion barrels of oil and multiple trillion cubic feet of natural gas”.
The bid round is said to have attracted significant interest from international oil companies, with dozens of players believed to have shown interest.
However, the awards have been delayed by a few months due to the coronavirus outbreak and challenging market conditions.
The acreage offered through the second bid round together comprises more than 34,000 square kilometres, and some areas are home to existing oil and gas discoveries.
Adnoc said in 2019 the five blocks together hold 290 targeted reservoirs across 92 prospects and leads. The acreage covers offshore blocks 3, 4 and 5, and onshore blocks 2 and 5.
All five blocks provide licensing opportunities for conventional oil and gas resources, but Block 2 also offers a separate licence for unconventional resources.
Abu Dhabi has in recent years attracted a growing number of oil majors from around the globe, including Indian and Chinese players, to its upstream sector as it expands its international alliances with the aim of getting both competitive terms and securing long-term markets for its oil exports.