Earlier this week, the world celebrated “Miner’s Day 2022” in honor of the exceptional contribution that miners worldwide make towards our daily lives despite the risks involved.
Miner’s Day coincided with the signing of the first-ever unconventional oil concession agreement between Malaysia and the UAE. The historic deal was signed between state-owned oil corporations, Abu Dhabi National Oil Company (ADNOC) and Petronas in the notable presence of the UAE President, Mohamed bin Zayed Al-Nahyan and Malaysian King Sultan Abdullah Riáyatuddin Al-Mustafa Billah Shah.
Hydrocarbon Exploration in the UAE
The six-year agreement is the first of its kind in the Middle East, as Malaysia will be making its debut investment in hydrocarbon exploration in the region. Through its national oil corporation, Petronas, Malaysia will hold 100% stake and operation rights to explore for and appraise unconventional oil in the “Unconventional Onshore Block 1” area. Located in Al Dhafra, the Unconventional Onshore Block 1 is a 2,000-square-kilometer area that makes up a part of Abu Dhabi’s substantial unconventional recoverable oil resources. It is estimated that Abu Dhabi holds up to 22 billion barrels of much lighter, sweet crude oil.
According to the UAE Minister of Industry and Advanced Technology Minister and CEO of ADNOC, Sultan bin Ahmed Al Jaber the cooperation will not only strengthen the ties between Malaysia and the UAE but also reinforce the country’s reputation as a trusted investment destination.
Furthermore, by focusing on unconventional oil, the UAE reiterates its climate change stance to support global energy security through low carbon intensity oil and gas production. This is particularly crucial given its host duties in the upcoming COP28 climate change conference held in Dubai Expo city in November 2023.
Given its reputation for unconventional resource production in Argentina and Canada, Malaysia could not have been a better partner in this agreement. Datuk Tengku Muhammad Taufik, President and Group CEO of Petronas, believes their experience will come in handy in resource-rich Abu Dhabi. Additionally, Taufik reckons the agreement will expand Malaysia’s global unconventional energy footprint in the region.
After the appraisal phase, both parties can enter into a production concession agreement, in which case Petronas will be awarded a term of 30 years from the first agreement. ADNOC can also opt for a 50 percent stake in the new production agreement.
Stay up to date with the latest oil and gas industry developments by following the Northtelecom blog.