Abu Dhabi National Oil Company (Adnoc) has allocated an onshore block to Occidental Petroleum of the US in the first such award in a competitive bid round.

Oxy, already a major investor in Abu Dhabi, will hold a 100% stake in the exploration phase and has committed to invest $244 million, including a participation fee, under a 35-year concession agreement.

“Occidental was selected after a competitive bid round in which they presented a compelling plan for exploration of the area,” said Adnoc chief executive Sultan al-Jaber.

"This concession award demonstrates how Adnoc is accelerating the exploration and development of Abu Dhabi’s vast untapped hydrocarbon resources.

"It will help Adnoc to unlock value and stay ahead of the long-term increase in demand for energy and oil and gas products."

The acreage covers 5800 square kilometres in the Al Dhafra region. Existing 3D seismic data already covers a large part of the block.

Block 3 is the first onshore concession to be awarded under Adnoc's current licensing round launched in April and follows the recent award of two offshore blocks by Abu Dhabi.

Block 3, which is adjacent to the ultra sour Shah gas field also operated by Oxy, could hold as much as 3.5 billion barrels of oil and up to 1 trillion cubic feet of gas, according to Oxy chief executive Vicki Hollub.

"One thing that we’re excited about with Block 3 in Abu Dhabi is that it’s one and half million acres, so it’s really huge. And in addition it has stack play,” Hollub told state-run newspaper, the National. "We believe that there’s potentially 3.5 billion barrels in place. We expect that it has 1 Tcf of gas, so we have both the ability to [find] oil and the ability to find gas in this block," she added.

Potential gas discoveries are likely to be sour with possible synergies for processing at the nearby Adnoc Sour Gas facilities.

These facilities, previously known as Al Hosn Gas, produce 1 billion cubic feet per day of gas. Oxy would be looking to expand capacity through “very minimal additional capital investment", Hollub said.

"So now we have the capacity up to 1.3 Bcfd. Ultimately, we’re going to look at how the reservoir performs and what additional gas we may be able to get into that plant, but I believe over time we’d be able to expand that capacity even more,” she added. Oxy was awarded 30-year rights to develop the $10 billion Shah gas field in Abu Dhabi’s western desert in 2011.

The ultra-sour gas development in which the Houston-based firm holds a 40% participating interest produces 1 Bcfd of gas.

The selection of Oxy follows awards in January of two offshore concessions to a consortium of Italy’s Eni and Thailand’s PTTEP.

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Oxy targets major finds with Adnoc block award