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. The award of the two blocks was endorsed by Abu Dhabi’s Supreme Petroleum Council (SPC).
Under the terms of the agreements, Eni will operate the concessions and PTTEP and Eni will invest at least AED844 million (US $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 kilometers.
Upon successful exploration and having established the commerciality of the discovered resources Eni and PTTEP will, together, be granted the opportunity to develop and produce any discoveries.
The concession agreements were signed by 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.
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 builds on ADNOC’s and Eni’s growing partnerships on various fronts, broadens 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 SPC’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.
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.