sharjah national oil corporation - snoc.ae · whilst snoc will operate area b with a non-operated...

2018 Sharjah Licence Round

Invitation from

Sharjah National Oil Corporation

on behalf of

Petroleum Council

Government of Sharjah

to participate in the


The Emirate of Sharjah is delighted to invite competent petroleum exploration and production companies as well as investors to participate in Sharjah’s first onshore licence round and join the Sharjah National Oil Corporation (SNOC) in exploring the onshore potential of Sharjah, based on mutually beneficial concession agreements.

Sharjah wishes to discover and develop new hydrocarbon resources, building on its recently encouraging exploration activities. The intended concessional arrangements will facilitate the efficient and speedy development and monetisation of any commercial discovery, whereby the National Oil Corporation is set to purchase and process the hydrocarbons through its existing gas processing and transmission facilities, where applicable.

Sharjah has always strongly supported private investment, providing the appropriate economic environment, to encourage sustainable development, employment and business opportunities for the benefit of the people. New partnerships in petroleum exploration and development will enhance and strengthen these policies.

Ahmed Bin Sultan Al-Qasimi

Chairman, Petroleum Council June 2018

June 2018


New globally competitive fiscal regime, which ensures smaller fields are highly commercial and larger accumulations also generate very attractive returns.

Concession agreement and JOA available in the Data Room, together with the relevant technical data including the 3D seismic. Bids due by 18th November. Register on the website www.snoc.ae.

Strategic exploration partnership with SNOC including a near term exploration well planned to be drilled in Concession Area B.

3 onshore concession areas available in proven / producing Thrust Zone play trend, including un-appraised deeper gas discovery below Sajaa gas-condensate field.

In excess of 5 TCF total proven resources from existing fields with production history confirming 90% gas recovery. Naturally fractured carbonate reservoirs with high well productivity, average first year rates exceeding 40+ MMSCFD per well.

Newly acquired extensive 3D seismic, (shot in 2016 and fully processed in 2017), significantly improves imaging of the fold thrust belt. Early indications of potentially large, undrilled leads & prospects.

Significant capacity available in existing SNOC field infrastructure, gas/condensate processing and export facilities. Suitable field discoveries can be tied into the existing plant in order to generate early cash flow at lower CAPEX with SNOC to purchase the hydrocarbons.

http://www.snoc.ae/


Introduction: Envoi has been engaged by Sharjah

National Oil Corporation (SNOC), on behalf of the Sharjah Petroleum Council (SPC), to assist in the search for established E&P companies and investors to participate in their first ever Licence Round focused on the proven-producing thrust play that dominates the central part of the Musandam Peninsula and United Arab Emirates (UAE). Sharjah is the third largest hydrocarbon producer in the UAE with three gas condensate fields comprising the large Sajaa, Kahaif and Moveyeid fields. Discovered in the late 1970s and 1980’s by Amoco (which merged with BP in 1998) their combined initial reserves are estimated to have been more than 5 TCF equivalent plus associated condensate. In 2013 the production licence expired resulting in SNOC taking control of the fields. Production decline has left significant capacity in the established surface infrastructure and processing plant which provides immediate access to the growing local UAE, energy hungry markets. Any new resources discovered can therefore be commercialised rapidly as SNOC guarantees to purchase any new gas-condensate discovered that can be fed into their processing facilities. Sharjah has developed new fiscal terms which ensure that even modest resources can be commercialised whilst larger accumulations will also generate very positive returns for investors. SNOC’s extensive data includes the new 2016 851 km² 3D seismic survey. The processing of this survey was completed in May 2018 and combined with the 2013 200km² 3D and key 2D legacy data, which covers the entire prospective Thrust Play Trend in Concession Areas A & B. The new 3D seismic is instrumental in unlocking the complex thrust structuring in the ongoing re-interpretation. This has potentially identified large new leads and prospects, whilst demonstrating that many historical wells drilled on old 2D were drilled off structure or missed the main Cretaceous Thamama carbonate reservoir in the complex thrusted geology. SNOC is now seeking well-resourced E&P companies and investors for strategic partnership to accelerate the exploration and exploitation of

the potential being identified by the new 3D seismic. Operatorship is available in Concession Areas A and C whilst SNOC will operate Area B with a non-operated interest available.

Exploration History: Although oil and gas exploration first occurred in Sharjah in the 1930s the Mubarek A-1, drilled in 1972, was the first commercial oil discovery. This well encountered oil pay in the Cretaceous Thamama and Wasia group platform carbonates offshore in the western Foreland basin area where the reservoir is fractured in fault and salt related structures, and can be sourced by organic units in the deeper Jurassic. The Lower Cretaceous carbonates are sealed by the overlying Upper Cretaceous Nahr Umr and Aruma shales. The field produced 60,000 bbls/day in 1974, declining by early 2000 to around 6,000 bbls/day. The Zora field, discovered in 1979 by the Sharjah-1 well flowed 14 MMSFCD from the Thamama on test. This was not appraised until 1999 when the Sharjah-2 well flowed 41 MMSCFD & 452 BOPD condensate on test. Onshore Sharjah, the exploration has been focused in the Thrust Play trend where several large gas fields were


discovered on the early 2D seismic in the late 1970s and 80s. The majority of the prospective Thrust Front Play was originally held in a 2,428 km2 concession awarded 100% to Amoco in 1978. Over the next 26 years exploration of the play resulted in three onshore Thamama discoveries:

Sajaa field (1980) 4.6 TCF and 541 MMBBLS

condensate

Moveyeid field (1981) 363 BCF and 25 MMBBLS

condensate

Kahaif field (1992) 553 BCF and 19.3 MMBBLS

condensate

First year production from the vertical, acid stimulated wells achieved an average first year rate of over 40 MMSCFD per well plus condensate of several thousand barrels per day/well, although some wells initially exceeded 100 MMSCF/D. Gas produced from Sajaa and Moveyeid contains low concentrations of H2S, although this is a little higher at Kahaif where the average 500 ppm required the installation of a sweetening plant which also has additional capacity for any H2S in future discoveries. The initial Sajaa discovery well, Sajaa-1 was drilled deeper than the subsequent wells and encountered an additional gas condensate accumulation in the Lower Cretaceous / Upper Jurassic, although this contained higher H2S concentrations. As a result this discovery was not developed at the time, with preference being to develop the sweeter gas condensate discovered in the overlying Thamama reservoirs. Appraisal of this deeper discovery remains outstanding, and is one of the opportunities available for Bidders to participate in as part of this Licence round.

Following the discoveries further exploration was carried out but additional accumulations proved elusive due to the structural complexity which could not be accurately resolved on the 2D data available at that time. After BP’s licence expired, SNOC took over exploration activities and has since acquired an extensive new high

spec 851 km2 3D seismic survey over the northern and central part of the Thrust Front Play. This also included incorporating existing 3D data with the total area of newly processed 3D data being 951 km2. The early indications from SNOC’s extensive new 3D seismic are that most historical wells were drilled off structure, or never reached their Thamama reservoir targets. Since BP left in 2013, the only other exploration in the Thrust Play trend was carried out by RAK Petroleum who took operatorship of a new 34 km2 East Sajaa Concession in 2008, however the one well drilled did not reach the target Thamama reservoir, and this structure may also be of interest to Bidders along with several others visible on the 3D seismic. Of the other wells drilled in the Thrust Play Trend, the Al Owaid-1 well is significant when compared to most of the historical wells as it encountered oil shows in the Cretaceous, and produced oil to surface on test, albeit at relatively low rates. This is now interpreted to have penetrated the stratigraphy in the previously undrilled Inner Thrust zone, immediately east of the main Thrust Front. Significantly this appears to have a different source origin and may be evidence of a separate play although no additional work has been completed to confirm this. Sharjah holds additional exploration potential in the shallow Tertiary Pabdeh play, where there has been nearby commercial production from a stratigraphic Eocene closure. In addition the offshore Western and Eastern areas may have potential and these are likely to be the subject of future licencing rounds.

Regional Tectonic & Stratigraphic

Evolution: Units deposited in the region related to the

plays span the period from Late Permian to early Tertiary, with the inferred Jurassic source rock of the Cretaceous play being deposited at the margins of the Tethys palaeo-ocean. Closure of the Tethys Ocean resulted in the deposition of Cretaceous passive margin shallow-water carbonates. Transition eastwards to a more distal


depositional environment is represented today by the deep water Hawasina and Sumeini Group, which today is found in the over thrusts to the West. The first major compressional episode occurred during the Middle to Upper Cretaceous triggered by the spreading of the ocean crust in the Indian Ocean and the movement of the Indian continent northwards. This produced initial uplift of the slope edge at the end of the Cenomanian which switched off the carbonate deposition. Today this is represented by an unconformity at the top of the Thamama Group and by the eroded overlying Wasia group. The second thrusting episode occurred in Late Eocene to Early Oligocene times with east to west compression which formed the Omani Mountains and deep burial of the shelf carbonates beneath the over thrusted deeper water Hawasina and Sumeini Group carbonates and cherts. This also resulted in increased clastic erosion and input westwards into the Cretaceous fore deep basin ahead of the thrusting. This resulted in the unconformable deposition of deeper marine foreland basin marls and shales that today make up the Upper Cretaceous Aruma Group and Lower Tertiary Pabdeh Group sediments. By Miocene times, the area to the west was dominated by a major salt basin constrained by the Asmari shelf, along the edge of which, salt withdrawal or solution features developed. Forming the sub-tidal and supra-tidal deposits of the Fars Group.

The compressional regime is still active today, with the trend of the Hagab Frontal Thrust mirrored by an active subduction zone on the other side of the Omani Mountains, offshore in the Gulf of Oman.

Petroleum Geology: SNOC’s focus for the first

Licence Round is the proven-producing Thrust Front play trend. Prospectivity of the northern and central part of the Thrust Front play, covered by Concession Areas A and B, is currently being evaluated with early stage interpretation of the new 3D proving instrumental in unlocking the structural complexity that was simply not possible on the old data. Reservoirs & Seals: The primary reservoir target in these two Licence areas are the Lower Cretaceous Thamama Group carbonates, in which up to 2,600 ft and 1,000 ft gas columns were encountered in the Sajaa and Moveyeid fields. The overlying shales and carbonate mudstones of the Nahr Umr and unconformable Upper Cretaceous

Aruma Formations are excellent top-seals. The Wasia Group (which contains reservoirs where present offshore to the west) is largely not present within onshore Sharjah. In the Sajaa field, gas production comes from the Thamama Formation made up of the Shuaiba, Kharaib, Lekhwair and Habshan units that resulted from two major depositional cycles and associated facies. The majority of the production comes from the Shuaiba which is interpreted to have been deposited on the shelf slope break that resulted in some of the best reservoir properties. Inter-crystalline porosities can reach 27% although the average is around 7%. In the areas of greatest structural curvature fracture porosity has enhanced the reservoir deliverability significantly and is responsible for the very high flow rates seen in the existing fields.

In the Sajaa field, Amoco also found gas in a well which penetrated the Jurassic age Izhra Formation. At the time these reserves were not developed as the gases tested were of lower quality than the gas condensate in the

overlying Thamama.

Source Rocks: The source for the gas condensate found in the Thamama Group reservoirs has not been definitively proven although geochemical analyses indicates that the Sajaa condensate may be linked to the hydrocarbons found in the Bukha field some 106 km to the north, and the Khusab-1 well some 80 km to the south. Based on this hydrocarbon correlation and bio-markers, organic rich Jurassic (including Kimmeridgian), and/or older source rock appears to be the most likely origin.

There is evidence in the fields to the west with early oil generated prior to being cracked and flushed with gas with

Source: Scotese

Source: Scotese


progressive depth of burial. Maturity modelling carried out with the available data suggests that Silurian source rocks were already in the gas window prior to trap formation but that some late gas would have been generated post-trap. The Late Jurassic-Early Cretaceous source rocks would regionally have been just into the oil window when structuration occurred but are now modelled to be in the gas window due to Late Cretaceous and Tertiary burial. There is very limited data to assess source rock potential to the east. Structuring & Traps: The structures identified to date in the Sharjah Thrust Front Zone are located within 3 thrust sheets of an imbricate stack. These sheets are further broken up into smaller sheets as a result of differential movement between the sub sheets, strike slip movement occurs along the sides of the sheets to accommodate the movement. This type of accommodation is clearly seen between Sajaa and Moveyeid as well as between Moveyeid and Kahaif so is expected to continue further south. The dominant structures are the result of compression from east to west resulting in thrusted anticlines. The Sajaa structure is the largest and simplest of all the features found to date in the Thrust Front Zone. Its structure consists of a gently folded asymmetrical anticline bounded to the west by the leading edge thrust (Ref: Schematic B-B’ Section). The two phase structural development results in significant trap modification. Early formed Cretaceous structures are obliquely reactivated during the Tertiary leading to segmentation of the pre-existing thrust front and enhancement of lateral ramp geometries. This is also evidenced by a tilted primary poro-perm transition in the Saaja field suggesting preservation of palaeo-structure by early charge.

Thrust Play Prospectivity: The ongoing 3D

seismic interpretation is highlighting potential for bigger, deeper sub-thrust prospects that could not be imaged on the old data. The potential identified and a summary of the three Concession Areas is summarised below:

Concession Area A (437 km2): This comprises an area of 437 km2, covered by 3D seismic and containing the 3 existing Sajaa, Moveyeid and Kahaif, discovered and developed gas condensate fields, owned and

operated by SNOC. The fields and wells within the area are excluded from the concession, however there was a deeper undeveloped gas discovery made below the Sajaa field which is included. The new 3D seismic indicates this structure may be significant and further exploration of this discovery is encouraged. There is also significant near field exploration potential in a number of existing and new play types, based on the 3D seismic. Several areas to the east are of interest and 3 possible leads including a closure which an old well targeted but TDd 400ft short of the objective, as well as a deep Thamama sub-thrust lead which could potentially contain significant resource potential. The new data also show a possible imbricate fault closure west of the existing Sajaa field which has not been drilled. Operatorship of the block is offered, with the successful bidder(s) holding an initial 75% equity, and carrying SNOC (25%) through the exploration and appraisal phases, (with the carry to be recovered during the development phase). Bids will be evaluated based on the drilling commitment proposed (min – 1 firm well).

Concession Area B (264 km2): This comprises an area of 264 km2, which is also covered completely by a new high spec 3D seismic survey (2017) providing a much improved image with additional new leads also becoming evident from the new data.


SNOC is in the planning phase for its first well which will be drilled in Concession Area B, with SNOC as Operator, regardless of a partner in the current bid round. SNOC will have a 50% participation in Area B, and the successful Bidder will hold a 50% non-operated position. There will be no carry or back costs required for SNOC and all partners will pay their own way through the exploration, appraisal and development phases. Bids will be evaluated based on a Bonus and agreement to fund a 50% share of the first well SNOC is planning.

Concession Area C (1,184 km2): The area contains a small amount of 3D and some 2D seismic coverage, and is less well explored, although there is a well with tested oil in the south of the block (Owaid-1), deemed to be non-commercial. Some interesting leads are evident on the available seismic however additional 3D seismic is required before drilling is recommended. The successful Bidder will be required to acquire at least 600 km2 of new 3D seismic as a minimum. Operatorship of the block is offered, with the successful bidder(s) holding an initial 75% equity and carrying SNOC (25%) through the exploration and appraisal phases (with the carry to be recovered during the development phase). Bids will be evaluated based on the work programme proposed (min 600 km2 of 3D). Future Updates: SNOC’s interpretation of the new 3D is ongoing and therefore not yet at the stage to enable detailed volumetric assessments although when completed these may be made available within the Data Room. Qualified Bidders will have access to the 3D seismic in addition to well and related data, and should take the opportunity to make their own interpretation of the data and prospectivity.

Commercial: The Sharjah Department of

Petroleum and Minerals was set up in 1972 to oversee all of the hydrocarbon exploration and production activities in Sharjah after the first commercial discovery. This was superseded by the Sharjah Petroleum Council (SPC) in 1999 which today governs both policy and, through SNOC, manages hydrocarbon E&P and related oil and gas investment in the Emirate including operatorship of the 3 fields, their production, surface processing facilities and commodity sales to market. As part of this Licence Round, a new fiscal system has been prepared with the involvement of independent advisors, which ensures that even smaller discoveries are commercially attractive whilst bigger resource potential generates very attractive commercial returns.

Sharjah’s new fiscal regime is based on a Concession Agreement with a ‘flexible gross split’ where government share of revenue is variable. The resulting threshold for any discovery is low and even small discoveries would be commercial. The fiscal system ensures that both small and large projects are commercially attractive for the investor, with the objective of encouraging the timely drilling of all prospects emerging from the 3D seismic interpretation. The new fiscal terms compare favourably with equivalent regimes elsewhere in the world. In addition SNOC offers to buy any gas and condensate that its existing processing facilities is able to take. Utilizing the existing processing and export facilities for gas and liquids will result in lower CAPEX for investors and a faster return on investment.

Infrastructure: Infrastructure is well established in

Sharjah which is connected to both local and regional customers for export of any new resources that are discovered, including international sales of condensate and LPG. The existing Sajaa Gas Processing Facility was originally designed to process up to 750 MMSCFD gas, 50,000 bbls/day condensate and 17,000 bbl/d LPG, including drying, sweetening (subject to H2S content) and compression services. Existing utilisation of the facilities is low and significant spare capacity exists.


SNOC owns and operates a combined total of 53 wells distributed in their three fields linked to 2 hydrocarbon liquid storage and export terminals at Hamriyah, built in 1981, consisting of two 500,000 barrels tanks and one offshore Single Point Mooring (SPM) buoy for VLCC tanker loading. An LPG terminal was later constructed in 1986, with a dedicated loading jetty inside Hamriyah Port and Free Zone with 400,000 barrels and 300,000 barrels of propane and butane storage capacity, respectively. The Hamriyah Port is significantly the only location in the Northern Emirates with existing infrastructure and connectivity capable of sending more than 1 Billion SCFD efficiently into the market. All pipelines in the Northern Emirates converge at Sajaa, giving it the ability to transfer this gas to anywhere in the UAE – a valuable convergence of infrastructure in a region that boasts of an intra-GCC gas pipeline network, owned and operated by SNOC, in conjunction with SEWA, Emarat, Dana Gas, DUSUP and Dolphin.

Opportunity and Obligations: SNOC is offering

between 50% and 75% equity in the three Concession Areas (excluding the existing producing reservoirs in the 3 producing fields). Concessions will be awarded under 30 year terms, with a 10 year extension. The exploration term will comprise three 2 year exploration periods, each with an agreed work programme obligation. Each bidder must qualify as either an Operator or Non-Operator (see Tender Protocol for procedure).

Bid Process & Time Line: The Bid process

consists of Registration, Qualification and Data Room Evaluation, leading to a Bid Deadline on the 18th November 2018. Concessions will be awarded by end of 2018. The process can be summarised as follows:

I. Registration: Each interested party must register online www.snoc.ae and read the ‘Tender Protocol’ which sets out the process and provides detailed instructions regarding the Licence Round.

II. Qualification & CA: Interested Parties who have Registered may then Qualify as an ‘Operator’ or ‘Non-Operator’ by supplying the relevant information detailed in the Tender Protocol, and executing a Confidentiality Agreement (CA).

III. Due Diligence & Data Review: Parties qualified by SNOC will be provided access to the online Data Room which includes key project information including the well data, a project presentation, and the commercial contracts. Remote access to a workstation containing the new 3D seismic will also be provided. A copy of the new 3D seismic data is also available under Licence, enabling further detailed in-house evaluation to be conducted.

IV. Bid Submission: As defined in the Tender Protocol bids are due on or before Sunday 18th November 2018, with the winning bidder(s) being announced shortly thereafter. Contracts will be effective from 1st Jan 2019.

Further Information: Detailed information

regarding the bidding process is available on the SNOC website www.snoc.ae. Interested parties should register on the website or by contacting Envoi, and follow the detailed instructions contained in the Tender Protocol which is also available for download from the SNOC website.

For any questions please contact: Mike Lakin

Envoi Limited

Old Stables House,

1d Manor Road,

London, W13 0LH,

United Kingdom

T: +44 (0)20 8566 1310

E: [email protected]

I: www.envoi.co.uk

Disclaimer: The information in this memorandum is for guidance only. Neither Envoi Limited (Envoi), or its client(s) (Client) nor any director, officer or employee of Envoi or its Client(s) accepts

responsibility for, or makes any representation or warranty, express or implied, with respect to the accuracy or completeness of the information, estimates and opinions contained in this document.

This document does not constitute an offer, and neither this document nor the information, estimates and opinions contained in it shall form the basis of any contract. Companies wishing to acquire

an interest in the project will be expected to make their own review of all documents and form their own judgments entirely. © Envoi Limited 2018

http://www.snoc.ae/

http://www.snoc.ae/

mailto:[email protected]

http://www.envoi.co.uk/

sharjah national oil corporation - snoc.ae · whilst snoc will operate area b with a non-operated...

Documents