By launching its first ever oil and gas licensing round, Abu Dhabi has become the latest sovereign entity to dive into the recent upstream exploration spree prompted by a near-$70 a barrel the oil price environment, after Lebanon, the UAE emirate of Ras Al Khaimah, Iraq and Bahrain.
The Abu Dhabi National Oil Company (Adnoc) has found prospects containing ‘multi-million barrels’ of oil and ‘multi-million cubic feet’ of natural gas in six blocks – four onshore and two offshore – based on a P50 estimate of reserves. Abdulmunim Saif al-Kindy, chief of Adnoc’s Upstream Directorate has refuted the notion that only 50 per cent of the reserves in place will be commercially viable to recover, telling MEED, “P50 is just a standard industry term”.
If that holds true, the prospective discovery has the potential to broaden Abu Dhabi’s energy production ambitions, and help Adnoc go way beyond the oil and gas production targets stipulated in its Vision 2030 strategy. Adnoc currently produces 3 million barrels a day of oil and 9.8 billion cubic feet of gas a day.
The bidding round comes at a busy time for the state energy firm, as it works to integrate its units and their operations, adopt cost-efficiency measures, and implement localisation policies. The addition of yet more onshore and offshore blocks to its portfolio will also redouble the value of Adnoc’s efforts to unlock greater value from its upstream assets.
Adnoc has already split its main offshore concessions into four key oil blocks for the renewal process this year, earning close to $8.3bn from seven international exploration and production companies, according to a calculation by MEED, by awarding them varying operating stakes for 40 years.
However, the critical point about this prospective reserve is that it has the potential to make Abu Dhabi self-sufficient in gas resources. Some of the blocks already have discoveries in place, with some containing ‘significant unconventional resource potential’, according to Adnoc.
Comprehensive studies of the prospects and leads, along with the targeted reservoirs during exploration phase, could lead to Adnoc stepping on considerable recoverable gas reserves. That will in turn help the energy major realise its key 2030 goal to make the gas-short emirate and the UAE less reliant on imports by producing indigenous gas to meet rising industrial, infrastructural and domestic demand.
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