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ADNOC Signs Exploration Concession Agreement with Italian, Thai Energy Giants

ADNOC Signs Exploration Concession Agreement with Italian, Thai Energy Giants
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ADNOC Signs Exploration Concession Agreement with Italian, Thai Energy Giants

ADNOC Signs Exploration Concession Agreement with Italian, Thai Energy Giants

Abu Dhabi National Oil Company (ADNOC) announced on Monday the signing of an exploration concession agreement with a consortium led by Eni Abu Dhabi, a subsidiary of Italy’s energy giant, and PTTEP MENA, a unit of Thailand’s PTT Exploration and Production Public Company Limited (PTTEP).

The award has been approved by Abu Dhabi’s Supreme Petroleum Council (SPC). It follows ADNOC’s award earlier this month of an onshore block to Occidental, highlighting how ADNOC continues to leverage and strengthen its strategic partnerships to accelerate the exploration and development of Abu Dhabi’s hydrocarbon resources.

The exploration concession agreement was signed by Dr. Sultan bin Ahmed Al Jaber, Minister of Industry and Advanced Technology and ADNOC Group CEO; Claudio Descalzi, CEO of Eni; and Phongsthorn Thavisin, CEO of PTTEP, state news agency WAM reported.

For his part, Dr. Al Jaber said: "This concession award reinforces ADNOC and Eni’s growing partnership across our value chain and deepens our relationship with Thailand’s PTTEP, one of the key markets for our crude oil and products."

"Despite volatile market conditions, we are making very good progress in delivering Abu Dhabi’s second competitive block bid round, underscoring our world-class resource potential and the UAE’s stable and reliable investment environment."

Under the terms of this agreement, Eni will operate the exploration phase of the concession, and PTTEP and Eni will collectively hold a 100 percent stake in the exploration phase, investing up to AED1.51 billion ($412 million) towards exploration and appraisal drilling, including a participation fee, to explore for and appraise oil and gas opportunities in Offshore Block 3.

Commenting on the deal, Descalzi said the award "follows the one achieved by the same consortium in 2019 for offshore exploration Blocks 1 and 2 and represents a further important step towards the realization of Eni’s strategy to become a leading actor in the development and production in Abu Dhabi, a leading region for the oil and gas industry, while contributing through its expertise in exploration to add further resources and exploit all potential synergies with the surrounding fields."

"It also further strengthen our relationship with our valuable partner PPTEP. Offshore Block 3 represents a challenging opportunity that can unlock significant value thanks to exploration and appraisal of shallow and deep reservoirs."

Following successful commercial discovery during the exploration phase, Eni and PTTEP will, together, have the right to a production concession to develop and produce such commercial discoveries.

ADNOC has the option to hold a 60 percent stake in the production phase of the concession. The term of the production phase is 35 years from the commencement of the exploration phase.

Thavisin said: "This concession award offers another great opportunity for PTTEP to strengthen collaboration with world-class strategic partners Eni and ADNOC. The consortium will bring capabilities, experiences and technology to accelerate the development of Offshore Block 3, as well as Offshore Blocks 1 and 2, and lead to a successful discovery. The strategic partnership has been established to jointly contribute to the petroleum development in UAE and be part of the growing industry.

"Meanwhile, this business progress has also reinforced our presence in the Middle East following the company’s Execute and Expand strategy. Such approach aims to sustainably increase both petroleum reserves and production in the future."

Offshore Block 3 covers an offshore area of 11,660 square kilometres northwest of Abu Dhabi city. New 3D seismic data has been acquired for a part of the block, which, combined with its proximity to the existing onshore oil and gas fields, suggests the concession area has promising potential.

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IMF: Middle East Conflict Escalation Could Have Significant Economic Consequences

Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki
Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki
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IMF: Middle East Conflict Escalation Could Have Significant Economic Consequences

Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki
Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki

The International Monetary Fund said on Thursday that an escalation of the conflict in the Middle East could have significant economic ramifications for the region and the global economy, but commodity prices remain below the highs of the past year.

IMF spokesperson Julie Kozack told a regular news briefing that the Fund is closely monitoring the situation in southern Lebanon with "grave concern" and offered condolences for the loss of life.

"The potential for further escalation of the conflict heightens risks and uncertainty and could have significant economic ramifications for the region and beyond," Kozack said.

According to Reuters, she said it was too early to predict specific impacts on the global economy, but noted that economies in the region have already suffered greatly, especially in Gaza, where the civilian population "faces dire socioeconomic conditions, a humanitarian crisis and insufficient aid deliveries.

The IMF estimates that Gaza's GDP declined 86% in the first half of 2024, Kozack said, while the West Bank's first-half GDP likely declined 25%, with prospects of a further deterioration.

Israel's GDP contracted by about 20% in the fourth quarter of 2023 after the conflict began, and the country has seen only a partial recovery in the first half of 2024, she added.
The IMF will update its economic projections for all countries and the global economy later in October when the global lender and World Bank hold their fall meetings in Washington.
"In Lebanon, the recent intensification of the conflict is exacerbating the country's already fragile macroeconomic and social situation," Kozack said, referring to Israel's airstrikes on Hezbollah in Lebanon.
"The conflict has inflicted a heavy human toll on the country, and it has damaged physical infrastructure."
The main channels for the conflict to impact the global economy have been through higher commodity prices, including oil and grains, as well as increased shipping costs, as vessels avoid potential missile attacks by Yemen's Houthis on vessels in the Red Sea, Kozack said. But commodity prices are currently lower than their peaks in the past year.
"I just emphasize once again that we're closely monitoring the situation, and this is a situation of great concern and very high uncertainty," she added.
Lebanon in 2022 reached a staff-level agreement with the IMF on a potential loan program, but there has been insufficient progress on required reforms, Kozack said.
"We are prepared to engage with Lebanon on a possible financing program when the situation is appropriate to do so, but it would necessitate that the actions can be taken and decisive policy measures can be taken," Kozack added. "We are currently supporting Lebanon through capacity development assistance and other areas where possible."