Adnoc plans first competitive tender for oil and gas blocks

By Anthony DiPaola and Mahmoud Habboush on 4/10/2018

ABU DHABI (Bloomberg) -- Abu Dhabi National Oil Co. will issue its first competitive tender for partners to explore for and develop oil and natural gas as the government-owned producer seeks new ways to increase production in the United Arab Emirates.

Bidding for four onshore and two offshore blocks will probably be completed by October, and Adnoc should select the winners by the end of the year, CEO Sultan Ahmed Al Jaber said Tuesday at a news conference in Abu Dhabi. The partners would have to pay for exploration, and once production starts, Adnoc would take a 60% stake, he said.

Abu Dhabi, the largest emirate in the UAE, holds about 6% of global crude reserves and produces most of the country’s oil. While the UAE, a member of OPEC, is curbing output in a global effort to clear a crude glut, Abu Dhabi plans to raise capacity to 3.5 MMbopd by the end of the year. It recently awarded concessions to companies including Total and Eni to help it develop fields already under production.

“Very rarely” does a major OPEC nation offer international oil companies the chance to explore within its borders, said Robin Mills, CEO of Dubai-based consultant Qamar Energy. “It should be fairly low risk since there is a lot of oil,” and Abu Dhabi’s fields have generally got a low cost of production, he said.

The tender will cover a combined area of almost 30,000 sq km that is estimated to contain “multiple billion barrels of oil and multiple trillion cubic feet of natural gas,” Abdul Munim Saif Al-Kindy, Adnoc’s director of upstream, said. He didn’t estimate how much of the oil and gas would be commercially viable for companies to produce.

The company says it can pump about 3 MMbopd, with just under half coming from offshore deposits, and is also looking to expand production of gas as fuel for power plants. The UAE is the fourth-largest member of OPEC and pumped 2.86 MMbopd in March, data compiled by Bloomberg show.

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