ADNOC awards offshore block to Japan’s Cosmo
The Abu Dhabi National Oil Company (ADNOC) has signed an exploration concession agreement, awarding the exploration rights for Abu Dhabi’s Offshore Block 4 to Cosmo E&P Albahriya Limited, a subsidiary of Japan’s Cosmo Energy.
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, ADNOC said on Wednesday.
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.
The exploration concession agreement was signed by Dr. Sultan Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology and ADNOC Group CEO, and Hiroshi Kiriyama, Group CEO of Cosmo.
Dr. Al Jaber said: “This concession award builds on our long-standing relationship with Cosmo and reinforces the deep-rooted and successful strategic relationship between the UAE and Japan, ADNOC’s largest importer of oil and gas products”.
He added: “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 percent stake in the exploration phase, investing up to $145 million (AED532 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 square kilometers northwest of Abu Dhabi city.
Hiroshi Kiriyama said: “We are excited to explore this promising block to unlock the hydrocarbon value by leveraging our expertise and experience.
“We are also certain that our success in this block can be crystallized by creating the synergies with Cosmo group’s existing oilfields and Mubarraz island which are operated by our affiliate, Abu Dhabi Oil Co., Ltd”.
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 per cent 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.
ADNOC launched Abu Dhabi’s second competitive block bid round in 2019, offering a set of major onshore and offshore blocks, on behalf of the Government of Abu Dhabi.
Based on existing data from detailed petroleum system studies, seismic surveys, exploration and appraisal wells data, estimates suggest the blocks in this second bid round hold multiple billion barrels of oil and multiple trillion cubic feet of natural gas.
Cosmo has long-standing partnerships in Abu Dhabi’s upstream sector with stakes in Abu Dhabi Oil Co., Ltd. (ADOC) and Bunduq Company Limited.