Adnoc awards stake in unconventional gas zone to Total

11 November 2018
This is the first award in the region for a concession area containing unconventional resources

Adnoc has awarded French energy major Total a 40 per cent stake in the Ruwais Diyab Unconventional Gas Concession on behalf of the Abu Dhabi government.

Under the terms of the deal, Total will explore, appraise and develop the concession area’s unconventional gas resources.

Adnoc will retain the majority 60 per cent stake in the concession, from which production is vital to the Abu Dhabi energy firm meeting its 2030 gas production target of 1 billion cubic feet a day (cf/d).

The agreement includes a six to seven-year exploration and appraisal phase which will then be followed by a 40-year production term. It marks the first time an upstream concession containing unconventional resources has been awarded in the region.

The value of the deal between Adnoc and Total was not disclosed in the statement.

Adnoc Group’s CEO Sultan al-Jaber was quoted as saying: “Total and Adnoc have agreed on commercial terms that will enable the project to deliver maximum value from our unconventional gas reserves, as we work towards achieving gas self-sufficiency, for the UAE, and transition to having the capacity to become a net gas exporter.”

Total’s CEO Patrick Pouyanné said, “The Diyab play has the potential to be a high impact play ranking alongside the most prolific North American shale gas plays and is an excellent addition to our exploration portfolio.”

With this agreement, Total has cemented its presence across Adnoc’s full value chain, from offshore and onshore exploration, development and production, to processing, products and shipping.

Total won a 20 per cent interest in the offshore Umm Shaif and Nasr block and a five per cent interest in the Lower Zakum block, part of Abu Dhabi’s premium offshore oil and gas concession, in March.

In January last year, Total won a 10 per cent stake in Adnoc’s main onshore concession, formerly known as the Adco concession.

The awarding of the first unconventional concession deal comes as Adnoc continues to pursue its first ever upstream licensing round, putting six blocks on offer.

The successful bidders of the licensing round are expected to be announced by Adnoc by the end of the year.

MEED had previously reported that international oil companies have expressed “significant interest” in the licensing round.

“We have received significant interest from other potential partners wanting to join other unconventional oil and gas concession areas that we are considering. Discussions are progressing with these multiple interested parties, and we will make further announcements in due course,” Al-Jaber was quoted as saying.

In early November, Abu Dhabi’s Supreme Petroleum Council announcement of Adnoc’s five year capital expenditure budget of $132bn, which includes a new integrated gas strategy to enable the UAE become gas self-sufficient, with the potential of transforming into a net gas exporter.

As part of this gas development policy, Adnoc says it will look to unlock and maximise value from its Hail, Ghasha and Dalma sour gas projects and Abu Dhabi’s gas caps, as well as new natural gas accumulations. This is apart from developing the Ruwais Diyab unconventional gas formation.

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