UAE Inks Historic Oil Deal With Malaysia To Explore Hydrocarbon In The Emirate

The UAE inked a historic deal with Malaysia to explore hydrocarbon resources in the Emirate. The six-year agreement, which was signed by the Abu Dhabi National Oil Company (ADNOC) and Malaysian oil and gas giant Petronas, marks the first time a Malaysian company has invested in an Abu Dhabi concession.

"The pioneering award to Malaysia's national oil and gas company launches the Middle East's first unconventional oil concession," Emirati state news outlet Wam reported.

UAE President Sheikh Mohamed and Malaysia's King Sultan Abdullah Sultan Ahmad Shah witnessed the deal's signing Monday. It centers on Abu Dhabi's "Unconventional Onshore Block 1," which covers more than 2,000 square kilometers in Al Dhafra. Based on the agreement, Petronas will retain a 100% stake in the operations of the concession to explore and appraise hydrocarbon resources in the unexplored region.

In a statement following the signing, Sultan Ahmed al-Jaber, the UAE minister of industry and ADNOC's CEO, reiterated the emirate's commitment to sustainably unlock oil reserves in the area. "We are delighted to partner with Petronas on this historic unconventional oil concession," he said.

Oil reserves in the Unconventional Onshore Block 1 are called "unconventional oil" because they cannot be accessed using traditional drilling techniques. Abu Dhabi's unconventional oil resources are estimated at 22 billion barrels.

"This award ushers a new chapter of strategic energy cooperation in the long-standing relationship between the UAE and Malaysia, and it reinforces the UAE's position as a trusted investment destination," al-Jaber added. "As one of the least carbon intensive oil and gas producers, ADNOC will continue to responsibly unlock value from Abu Dhabi's vast hydrocarbon resources in a reliable and sustainable manner, to drive local economic growth and support global energy security."

"As such, we have driven the de-risking of Abu Dhabi's unconventional oil resources and look forward to building on this with Petronas to realize the full potential of Unconventional Onshore Block 1," he continued.

The deal comes after ADNOC conducted pilot operations in the concession area. If the appraisal phase becomes a success, then both parties may enter a production concession of 30 years, starting from the date of awarding of the first concession to Petronas. ADNOC may also hold a 50% stake in the concession to further create a significant in-country value for the UAE.