Abu Dhabi Plans First Competitive Tender for Oil, Gas Blocks

(Bloomberg) -- Abu Dhabi National Oil Co. will issue its first competitive tender for partners to explore for and develop oil and natural gas as the government-owned producer seeks new ways to increase production in the United Arab Emirates.

Bidding for four onshore and two offshore blocks will probably be completed by October, and Adnoc should select the winners by the end of the year, Chief Executive Officer Sultan Ahmed Al Jaber said Tuesday at a news conference in Abu Dhabi. The partners would have to pay for exploration, and once production starts, Adnoc would take a 60 percent stake, he said.

Abu Dhabi, the largest emirate in the U.A.E., holds about 6 percent of global crude reserves and produces most of the country’s oil. While the U.A.E., a member of the Organization of Petroleum Exporting Countries, is curbing output in a global effort to clear a crude glut, Abu Dhabi plans to raise capacity to 3.5 million barrels a day by the end of the year. It recently awarded concessions to companies including Total SA and Eni SpA to help it develop fields already under production.

“Very rarely” does a major OPEC nation offer international oil companies the chance to explore within its borders, said Robin Mills, chief executive officer of Dubai-based consultant Qamar Energy. “It should be fairly low risk since there is a lot of oil,” and Abu Dhabi’s fields have generally got a low cost of production, he said.

The tender will cover a combined area of almost 30,000 square kilometers (11,580 square miles) that is estimated to contain “multiple billion barrels of oil and multiple trillion cubic feet of natural gas,” Abdul Munim Saif Al-Kindy, Adnoc’s director of upstream, said. He didn’t estimate how much of the oil and gas would be commercially viable for companies to produce.

The company says it can pump about 3 million barrels daily, with just under half coming from offshore deposits, and is also looking to expand production of gas as fuel for power plants. The U.A.E. is the fourth-largest member of OPEC and pumped 2.86 million barrels a day of oil in March, data compiled by Bloomberg show.

To contact the reporters on this story: Anthony DiPaola in Abu Dhabi at adipaola@bloomberg.net, Mahmoud Habboush in Abu Dhabi at mhabboush@bloomberg.net.

To contact the editors responsible for this story: Bruce Stanley at bstanley5@bloomberg.net, Claudia Carpenter

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