Occidental Petroleum’s (Oxy) footprint in the UAE will almost double after the Houston-based oil producer won concession rights this week to explore an onshore area covering more than 4,200 km2 (~1625 sq mi).
Oxy will assume a 100% stake in the exploration program located in the southeastern section of the emirate. Terms include a financial commitment of at least $140 million to support the program, a sum that includes a participation fee.
If commercial production is achieved, the Abu Dhabi National Oil Company (ADNOC) will have the option to claim a 60% stake of the concession which expires 35 years after exploration activities begin.
The award was signed off by Abu Dhabi’s Supreme Petroleum Council (SPC) following an open bidding round for Block 5. The SPC, which also serves as ADNOC’s board of directors, signaled last month its support of awarding exploration blocks in the country’s second-ever bid round.
“We are very pleased to once again collaborate with Occidental and strengthen our long-standing partnership,” Sultan Ahmed Al Jaber, ADNOC Group CEO, said in a joint statement.
“Crucially, the award underscores the attractiveness of Abu Dhabi’s huge untapped resource potential and ADNOC’s ability to continue to secure foreign direct investment to the UAE’s stable and trusted business environment, despite tough market conditions.”
In the announcement, Vicki Hollub, CEO of Oxy, noted that the new concession is adjacent to the 5.782 km2 (~2,230 sq mi) Onshore Block 3 where two exploration wells have recently been completed with “extremely promising results.”
Oxy was granted rights to the larger block in 2019 after committing to invest $244 million in the UAE’s first-ever open bid round.
“We see significant potential in Onshore Block 5 and, in partnership with ADNOC, will continue to work to help unlock the vast untapped resources in Abu Dhabi,” Hollub said in the statement.
The latest award follows an SPC announcement that the UAE holds nearly 22 billion bbl of unconventional resources and that its conventional reserves have been boosted by to 2 billion bbl to a total estimate of 107 billion bbl.
Source: Abu Dhabi National Oil Company
