PETRONAS, ADNOC sign first unconventional oil concession deal in the Middle East

Malaysia’s national oil and gas company, PETRONAS, signed a deal with Abu Dhabi National Oil Co. (ADNOC) to operate Abu Dhabi’s Unconventional Onshore Block 1.

The agreement launches the Middle East’s first unconventional oil concession and marks the first time a Malaysian company will invest in and explore for hydrocarbons in Abu Dhabi, ADNOC said in a release Dec. 5.

Under the 6-year concession agreement, PETRONAS (100%) will explore for and appraise unconventional oil in the block, which covers more than 2,000 sq km in Al Dhafra region.

Following a successful appraisal phase, the parties can enter a production concession with a term of 30 years from the first award of the concession to PETRONAS, with ADNOC having the option to hold a 50% stake in the production concession.

PETRONAS will contribute financially to ADNOC’s ongoing 3D mega seismic survey, which has already acquired seismic data within the concession area. Terms were not disclosed.

Abu Dhabi’s unconventional recoverable oil resources are estimated at 22 billion bbl of very light and sweet crude, comparable to ADNOC’s lower-carbon Murban grade, the company said.