(Bloomberg) -- Eni SpA and Thailand’s PTT Exploration and Production Pcl secured rights to explore for oil and natural gas in Abu Dhabi, committing to invest at least $230 million to assess the offshore blocks.
The concession will be operated by Eni, and will be fully-owned by the Italian company and the government-owned Thai producer. Abu Dhabi National Oil Co. will have the option of retaining 60 percent of the fields once they reach the production phase.
“We are engaging with partners who actually put skin in the game,” Sultan Ahmed Al Jaber, Chief Executive Officer of government-owned Adnoc, said at a conference in Abu Dhabi.
Eni last year won rights to produce at an adjacent offshore field. Using the same processing and transport facilities will help the company bring any gas that’s discovered at the new block to market in as little as two years, Claudio Descalzi, Eni’s chief executive officer, told Bloomberg TV.
“The main issue is to start exploration as soon as possible to be able to increase production,” Descalzi said. The company could spend $1 billion to $2 billion to develop production at the exploration block.
Middle Eastern energy producers are among the industry’s most prolific investors in future output capacity. As global oil majors have limited their spending amid volatile swings in crude prices, state producers are investing billions of dollars to expand output and find new hydrocarbon deposits.
The United Arab Emirates, of which Abu Dhabi is the capital, agreed to reduce output this year to bolster prices. The Organization of Petroleum Exporting Countries and partners including Russia pledged to cut 1.2 million barrels of daily production to stem a surplus and stabilize the crude market.
Despite paring its current production, the U.A.E. is working to build greater future capacity. Adnoc in April announced its first competitive tender for partners to explore for and develop oil and gas. The Eni concession was the first to be awarded from that package.
Eni has made offshore discoveries from the Americas to Africa and the Mediterranean. The Rome-based company has been active in the Persian Gulf to build on its successful discoveries. In addition to the Abu Dhabi deals, it is set to win an award in Oman on Monday and wants to partner in Qatar’s liquefied natural gas projects.
Click here to read more on Abu Dhabi’s global ambitions
Abu Dhabi holds about 6 percent of global crude reserves and pumps most of the U.A.E.’s oil. Adnoc aims to boost oil production capacity to 5 million barrels a day by 2030 from more than 3 million now.
Adnoc is also seeking partners to take a 40 percent stake in its refining business that could be valued at about $8 billion. Descalzi said he’s “optimistic” Eni could win a stake in that project too, which could boost the gains the company makes by linking its existing production in the area to refining facilities.
(Updates with Eni CEO comments from fourth paragraph.)
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