Abu Dhabi National Oil Company (ADNOC) announced on Saturday the signing of agreements to award two offshore blocks to a consortium led by Italy’s Eni and Thailand’s PTT Exploration and Production Public Company Limited (PTTEP) following a competitive bid round.
The two blocks in the northwest of Abu Dhabi – Offshore 1 and Offshore 2 – are the first blocks to be awarded as part of Abu Dhabi’s first competitive open block licensing strategy in April.
Under the terms of the agreements, Eni will operate the concessions and PTTEP and Eni will both hold a 100 percent stake in the exploration phase, investing at least AED844 million ($230 million) to explore for oil and gas, and appraise the existing discoveries in Offshore Block 2.
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 kilometres.
Upon successful exploration, Eni and PTTEP will be granted the opportunity to develop and produce any discoveries, with ADNOC retaining the option to hold a 60 percent stake in the production phase.
Dr Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO, 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.
“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 maximize 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.
Claudio Descalzi, CEO of Eni, 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.”
Phongsthorn Thavisin, president and CEO of PTTEP, added: “We are excited and enthusiastic to establish our first-ever presence in the UAE.”
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.
The UAE is the world’s seventh-largest oil producer, with about 96 percent of its reserves within the emirate of Abu Dhabi.