How do you make yourself a new best friend? Grant them a concession to one of your offshore drilling sites. That’s what Abu Dhabi National Oil Company (ADNOC) did with Pakistan Petroleum Limited (PPL). Warning, it may come with a hefty price tag. PPL will pay ADNOC $304.7m after a second competitive bid round. On top of this, ADNOC reserves the right to hold a 60% interest in the concession’s production if a successful commercial discovery is made.
PPL is responsible for 20% of Pakistan’s natural gas supplies and manages 15 fields across the South Asian nation. The deal with ADNOC will increase Pakistan’s reliance on the UAE for crude resources for the next 35 years — that’s how long the concession lasts — and further strengthen the diplomatic ties between the two countries.
why it matters
This deal marks the first time in history that ADNOC awards an offshore concession to a Pakistani consortium.