In June 2018, Sharjah announced that it would offer three concession areas to international bidders, but there was some scepticism surrounding the licensing round (the emirate’s first) due to its very complicated geology, which had previously led to unsuccessful exploration attempts.
But on 13 January 2019, Sharjah National Oil Corporation (SNOC) signed a long-term agreement awarding Italian energy firm Eni the three concessions to explore and develop onshore oil and gas fields in a 30-year partnership deal.
Eni will operate areas A and C with a 75% participating interest (SNOC holds the remaining 25% as a partner), while SNOC retains operatorship in Area B with a 50% participating interest (Eni holds 50%). The concession agreements cover the exploration, appraisal and development of oil and gas resources in the areas. When asked about the key to attracting such a big company, SNOC CEO Hatem Al Mosa laughs, “It’s about doing good homework.”
Before launching the licensing round, SNOC completed extensive seismic surveys which Al Mosa says covered almost 900sqkm, using the latest 3D seismic technology. He believes this is key, particularly with the complex geology in the UAE’s northern emirates.
“We did not take a shortcuts during the survey, we put very strict quality control in the data capture, we went ahead and interpreted the seismic data and did most of the processing,” he adds. “All of that was made available to the bidders.”
He notes that SNOC had already chosen the location for the first exploration wells in Block B, where it retains operatorship.
“It shows the bidders how confident SNOC is, with tens of millions of dollars already committed by SNOC to commission this program,” Al Mosa says. “Also, the availability of this verified, high-quality quality data to all the bidders basically encouraged major oil and gas companies to participate.”
Restarting exploration activity has been high on SNOC’s agenda, according to Al Mosa, but required “top notch seismic data and interpreters.” With advancing technology, SNOC had just that.
“This last seismic survey identified several prospects, and it even identified why some of the previous exploration wells missed the target, because it actually showed how far they were from the prospects, according to the new seismic data,” Al Mosa says. He is quick to note that all seismic data is subject to interpretation, and drilling is the only true test of a prospective well.
SNOC took operatorship of Area B because after the seismic survey, it invested the money and resources to drill a well in that concession area. But Al Mosa says SNOC was willing to explore alone, if necessary.
“SNOC was very serious about the exploration in Sharjah, and we were willing to take all three blocks,” he says.
“However, we still prefer to have an experienced partner with us, because it definitely improves the probability of success when you have experienced multinational oil and gas company working with you,” Al Mosa adds.
Together with Eni, SNOC will drill multiple exploration wells, complete more seismic work on Block C—and the other, previously surveyed blocks, if necessary. He says that this award is just “the tip of the iceberg” for these three blocks. But SNOC has larger plans for Sharjah.
He notes that the company is working to import LNG, plans to expand its LPG blending and truck loading facility, and says that gas storage is a high-potential project, where SNOC could “potentially invite other national oil companies to participate.”
Sharjah has other resources to leverage, but Al Mosa is in no hurry—the emirate’s first international exploration licensing round has been instructive.
“We do plan to launch other bid rounds for other open acreage in Sharjah, but we are not rushing into that immediately,” Al Mosa says. “We want to do our homework first to make sure it is a successful licensing round.”