The Abu Dhabi National Oil Company (ADNOC) signed an exploration concession agreement with Cosmo E&P for the exploration rights to Abu Dhabi’s Offshore Block 4. The award has been approved by Abu Dhabi’s newly formed Supreme Council for Financial and Economic Affairs (SCFEA) and marks the first of such awards endorsed by the SCFEA. The award of Offshore Block 4 follows the recent exploration block awards to Occidental, as well as a consortium led by Italy’s Eni and Thailand’s PTTEP.
Sultan Dr. Al Jaber, UAE Minister of Industry and Advanced Technology and ADNOC Group CEO said about the agreement: “We are delighted to extend our partnership with Cosmo, particularly as this award underscores, once more, the important role of energy cooperation in enhancing economic relations between the UAE and Japan as we focus on the post-Covid recovery. Cosmo was selected after a very competitive bid round. They bring expertise and understanding of our offshore environment, technology, and market access – key ingredients that underpin ADNOC’s targeted approach to strategic partnerships, which is enabling us to unlock and maximize value from our assets and resources as we continue to deliver on our 2030 strategy.”
Under the terms of the agreement, Cosmo will hold a 100% stake in the exploration phase, investing up to $145 million 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 4,865 sq km northwest of Abu Dhabi city.
“The Government of Abu Dhabi and Cosmo have a strong partnership in the oil and gas sector which we have built for more than half a century. This award represents a significant milestone for us to accelerate our upstream business in Abu Dhabi and further strengthens our seamless and multi-faceted partnership with both Abu Dhabi and ADNOC. We are excited to explore this promising block to unlock the hydrocarbon value by leveraging our expertise and experience,” said Hiroshi Kiriyama, Group CEO of Cosmo.
Following a successful commercial discovery during the exploration phase, Cosmo will have the right to a production concession to develop and produce such commercial discoveries. ADNOC has the option to hold a 60% stake in the production phase of the concession. The term of the production phase is 35 years from the commencement of the exploration phase and the block offers the potential to create significant in-country value for the UAE over the lifetime of the concession.
In addition to drilling exploration and appraisal wells, the exploration phase will see Cosmo 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.