The Abu Dhabi National Oil Company (ADNOC) signed an exploration concession agreement, awarding the exploration rights for Abu Dhabi’s Offshore Block 4 to Cosmo E&P Albahriya Limited, a wholly-owned subsidiary of Japan’s Cosmo Energy Holdings Co., Ltd. (Cosmo).
Cosmo will hold a 100% 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.
“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,” said ADNOC Group CEO Dr. Sultan Al Jaber. “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,” he added. “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.”
The award was 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, highlighting ADNOC’s ability to continually deliver value in Abu Dhabi’s second competitive block bid round and leverage its strategic partnerships to accelerate the exploration and development of Abu Dhabi’s hydrocarbon resources.
“We are excited to explore this promising block to unlock the hydrocarbon value by leveraging our expertise and experience,” said Cosmo CEO Hiroshi Kiriyama. “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% 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.
Cosmo will also 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.
Last month, ADNOC and ICE Futures Abu Dhabi (IFAD) signed an agreement with Cosmo Oil Co., Ltd. – one of Cosmo Energy Group companies – to explore the potential opportunity to price crude oil with reference to the new ICE Murban Crude Oil Futures. Bilateral economic relations between the UAE and Japan date back to 1961 when the first shipment of UAE crude oil was exported from the Umm Shaif offshore field in Abu Dhabi to Japan. Today, Japan imports approximately 30% of its crude oil from the UAE.
