Malaysia’s Petronas to explore for 'unconventional oil' in Abu Dhabi

The Abu Dhabi National Oil Company (ADNOC) announced a new deal today related to unconventional exploration. 

ADNOC said that it awarded a contract to the Malaysian oil company PETRONAS to conduct energy exploration in Abu Dhabi’s Unconventional Onshore Block 1, which is located in the western Al Dhafra region of Abu Dhabi. PETRONAS will own 100% of the operation to explore for unconventional oil there for six years. ADNOC will have the chance to own a 50% stake following the appraisal phase, which comes after oil is discovered, according to a statement from PETRONAS. 

What it means: Unconventional oil refers to crude oil that is accessed in relatively complex ways that differ from the conventional vertical drilling that predominates in much of the world, including the Gulf. One common method of unconventional oil and gas exploration is fracking, which involves injecting liquid into underground rocks. 

Unconventional oil is often found in oil sands, which exist in Russia, the Americas and other parts of the world. PETRONAS has experience in unconventional oil exploration in Canada and Argentina, for example. 

Why it matters: The contract represents ADNOC’s continued willingness to embrace unconventional exploration strategies. ADNOC first delivered unconventional gas back in 2020. 

The agreement also represents the continued importance of fossil fuels in the United Arab Emirates, despite the Gulf state’s embrace of green technology and renewable energy. Most recently, the Emirati state-owned Masdar has been exploring solar, wind and hydrogen power opportunities. 

Know more: Saudi Arabia’s state oil company Aramco has also been exploring new exploration techniques for years. Aramco started drilling horizontally for oil back in the 1990s.