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For the first time, a Pakistani company invested and explored oil and gas in the Abu Dhabi concession area.
Abu Dhabi National Oil Company (ADNOC) announced on Tuesday the signing of a historic exploration concession agreement, granting the exploration rights for Abu Dhabi Offshore Block 5 to a consortium of four Pakistani companies-Pakistan Petroleum Limited (PPL), Mali Petroleum Company Limited (MPCL), Oil and Gas Development Company Limited (OGDCL) and Government Holding (Private) Company Limited (GHPL) – in the second round of competitive block bids in Abu Dhabi. The consortium is led by PPL.
The award marks the first time that a Pakistani company has invested and explored for oil and gas in the Abu Dhabi concession area. It is also the first time ADNOC has cooperated with a Pakistani energy company.
The agreement builds on the deep-rooted bilateral relationship between the UAE and Pakistan, and emphasizes ADNOC’s approach to expanding strategic partnerships, including those that can provide the company’s crude oil and products with access to key growth markets.
The exploration concession agreement was signed by Dr. Sultan bin Ahmed Al Jaber, the UAE Minister of Industry and Advanced Technology and ADNOC Managing Director and Group CEO, and PPL Managing Director and CEO Moin Raza Khan.
Dr. Al Jaber said in his speech: “This historic exploration concession award marks a new chapter in the energy cooperation between the UAE and Pakistan in the 50-year relationship. It is an important platform on which we can promote win-win opportunities. Supporting Pakistan’s energy security and further strengthening the strategic and economic ties between the two countries. We are very happy to cooperate with Pakistan Petroleum Co., Ltd. and other consortium members on Block 5 offshore.
“The consortium was selected as part of the Abu Dhabi block bid, and we have once again strengthened our approach to strategic partnerships that contribute to the right combination of market access, capital, first-class expertise or advanced technology. We are very optimistic that as we continue to accelerate the exploration and development of undeveloped resources in Abu Dhabi in accordance with the wise instructions of the leadership, we may be able to release important value with all our partners in the second round of competitive block bidding.”
According to the terms of the agreement, the consortium will hold 100% of the shares in the exploration phase and invest up to 304.7 million US dollars (1.12 billion dirhams) for exploration and evaluation drilling, including participation fees, to explore and evaluate oil and be located in Abu Dhabi City 100 kilometers to the northeast, natural gas opportunities in a block of 6,223 square kilometers offshore.
Khan said: “The PPL-led consortium is delighted to be selected as the concession award for Abu Dhabi Offshore Block 5. This award is not only a watershed moment for Pakistan and the Emirate of Abu Dhabi to achieve bilateral energy cooperation and economic ties, but also provides Opportunities to strengthen strategic cooperation with ADNOC to share technical knowledge and expertise.
“We are particularly pleased that this consortium is composed of the’big four’ national exploration and production companies, which are fully prepared to support ADNOC and the Emirate of Abu Dhabi to strengthen its leading position in the global energy sector.”
After successful commercial discoveries during the exploration phase, the consortium will have the right to obtain production concessions for the development and production of such commercial discoveries. ADNOC can choose to hold 60% of the shares during the production phase of the concession. The duration of the production phase is 35 years after the start of the exploration phase, and the block is likely to create important domestic value for the UAE during the entire life cycle of the concession.
In addition to drilling exploration and evaluation wells, the exploration phase will also see the consortium provide leverage and financial and technical contributions to ADNOC’s large-scale seismic exploration, which is acquiring 3D seismic data in the block area. The data already obtained in most areas of the block and its proximity to existing oil and gas fields indicate that the concession area has broad potential.
ADNOC launched the second round of competitive block bids in Abu Dhabi in 2019, providing a set of major onshore and offshore blocks on behalf of the Abu Dhabi government. The Pakistani consortium awarded the offshore block 5 to the Pakistani consortium and ended the second round of block bidding, which has submitted a very competitive proposal for the geographic area provided.
After ADNOC recently discovered 22 billion storage tank barrels (STB) recoverable unconventional oil resources and 160 trillion standard cubic feet (SCF) recoverable unconventional natural gas resources, it decided not to grant exploration licenses for onshore block 2. ADNOC intends to work with potential partners to obtain unconventional resource licensing opportunities in this geographic area. This area contains some unconventional resources that have been discovered that have production potential that is parallel to the most productive shale oil region in North America.
As part of the second round of block bidding in Abu Dhabi, ADNOC awarded Offshore Block 4 to a wholly-owned subsidiary of Cosmo Energy Holdings Co., Ltd.; wholly-owned by Eni and PTT Exploration and Production Public Company Limited (PTTEP) Offshore Block 3 of the consortium led by the subsidiary; and Onshore Block 5 to Occidental. Based on existing data from detailed oil system studies, seismic surveys, exploration and evaluation well data, estimates indicate that the blocks in the second round of bidding contain billions of barrels of oil and trillions of cubic feet of natural gas.
PPL operates 15 production oil fields in Pakistan, which account for more than 20% of the country’s total natural gas supply.
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