'Red-Letter Day': ADNOC, Petronas Sign Unconventional Resources Deal
The deal awards the first concession in the Middle East for unconventional oil resources.
Malaysian energy giant Petronas and the Abu Dhabi National Oil Company (ADNOC) have signed the first concession in the Middle East for unconventional oil resources, the companies announced on 5 December.
Under the 6-year concession agreement, Petronas will hold a 100% stake and operatorship to explore and appraise the Unconventional Onshore Block 1, a 2,000-km2 concession area in the Al Dhafra region in the Emirate of Abu Dhabi.
Following a successful appraisal phase, the partners can enter a production concession in which ADNOC has the option to hold a 50% stake.
The agreement is the first investment by a Malaysian company in an Abu Dhabi concession, the UAE state news agency WAM said.
Datuk Tengku Muhammad Taufik, president and group CEO of Petronas, said the development is a red-letter day for the company.
“I am very pleased to note that the United Arab Emirates and Malaysia’s long and fruitful bilateral ties have progressed to a partnership between Petronas and ADNOC. Petronas is honored to have this opportunity to explore and appraise unconventional energy with a progressive and forward-looking partner such as ADNOC,” he said.
“This partnership bears strong testament to our deep unconventional expertise in Canada and Argentina which we developed over the last decade, and we look forward to bringing this experience to the world-class resources in Abu Dhabi. It will also see Petronas widen its global unconventional energy footprint to include the United Arab Emirates in its existing portfolio,” he added.
The agreement will see Petronas leverage and contribute financially to ADNOC’s ongoing 3D mega-seismic survey which has already acquired seismic data within the concession area, WAM reported.
The country’s unconventional recoverable oil resources are estimated at 22 billion bbl of very light and sweet crude, comparable to ADNOC’s flagship lower-carbon Murban grade, WAM said.
“We are delighted to partner with Petronas on this historic unconventional oil concession. This award ushers a new chapter of strategic energy cooperation in the longstanding relationship between the UAE and Malaysia, and it reinforces the UAE’s position as a trusted investment destination," Minister of Industry and ADNOC's CEO Sultan Ahmed al-Jaber said.
“As one of the least carbon-intensive oil and gas producers, ADNOC will continue to responsibly unlock value from Abu Dhabi’s vast hydrocarbon resources in a reliable and sustainable manner to drive local economic growth and support global energy security, in line with the wise directives of the UAE’s leadership. As such, we have driven the de-risking of Abu Dhabi’s unconventional oil resources and look forward to building on this with Petronas to realize the full potential of Unconventional Onshore Block 1," he added.
The agreement with ADNOC is another step by Petronas toward expanding its unconventional footprint globally.
In September Petronas announced it had signed a memorandum of understanding with Argentina’s national oil company YPF to collaborate on an integrated liquefied natural gas (LNG) project and other areas, including upstream, petrochemicals, and clean energy solutions.
“Petronas’ expertise in integrated LNG and unconventional plays will add value to the intent and synergy of both parties in further exploring potential LNG opportunities in Argentina, leveraging on Vaca Muerta’s vast unconventional gas resources,” Taufik said at the time.
The company’s strategic alliance with YPF began in 2014 through its partnership in the La Amarga Chica project, Vaca Muerta, as part of its growth aspiration in the Americas, it said in a release.
In Canada Petronas is the operator of a large joint venture in the North Montney in northeast British Columbia with more than 800,000 gross acres of mineral rights with 53 Tcf of reserves and contingent resources, according to the company.