As part of Abu Dhabi’s second competitive block bid round, ADNOC has signed a historic exploration concession agreement, awarding the exploration rights for Abu Dhabi’s Offshore Block 5 to a consortium of four Pakistani companies.
Led by Pakistan Petroleum Limited (PPL), the consortium also includes Mari Petroleum Company Limited (MPCL), Oil and Gas Development Company Limited (OGDCL), and Government Holdings (Private) Limited (GHPL).
In a statement on Tuesday, ADNOC emphasised that the award marks the first time Pakistani companies invest in and explore for oil and gas in an Abu Dhabi concession as well as the first time ADNOC partners with Pakistani energy companies.
The exploration concession agreement was signed by Dr. Sultan Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology and Managing Director and Group CEO of ADNOC, and Moin Raza Khan, Managing Director and CEO of PPL.
Dr. Al Jaber said: “The consortium was selected as part of Abu Dhabi’s block bid round where we have once again reinforced our approach to strategic partnerships that contribute the right combination of market access, capital, best-in-class expertise or advanced technology. We are very optimistic about the potential to unlock significant value with all our partners in this second competitive block bid round as we continue to accelerate the exploration and development of Abu Dhabi’s untapped resources, in line with the Leadership’s wise directives”.
Under the terms of the agreement, the consortium will hold a 100 per cent stake in the exploration phase, investing up to $304.7 million (AED1.12 billion) towards exploration and appraisal drilling, including a participation fee, to explore for and appraise oil and gas opportunities in the block that covers an offshore area of 6,223 square kilometres and is located 100 kilometres northeast of Abu Dhabi city.
Khan said: “This award is not only a watershed moment for Pakistan and the Emirate of Abu Dhabi towards bilateral energy cooperation and economic links but also offers an opportunity to strengthen strategic cooperation with ADNOC to share technical know-how and expertise”.
Following a successful commercial discovery during the exploration phase, the consortium will have the right to a production concession to develop and produce such commercial discoveries. ADNOC has the option to hold a 60 per cent stake in the production phase of the concession. The term of the production phase is 35 years from the beginning of the exploration phase.
In addition to drilling exploration and appraisal wells, the exploration phase will see the consortium leverage and contribute financially and technically to ADNOC’s mega seismic survey, which is acquiring 3D seismic data within the block area. The data already acquired over a large part of the block combined with its proximity to existing oil and gas fields, suggests the concession area has promising potential.
The second competitive block bid round was launched in 2019 and the award to the Pakistani consortium concludes the round.
In a separate statement on Tuesday, OGDCL said that the consortium companies have established an independent company viz., Pakistan International Oil Limited (PIOL) at Abu Dhabi Global Market with each consortium company having a 25 per cent equity stake.