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United Arab Emirates: E&P Profileby Daniel Canty on Nov 21, 2012
As the world’s upstream professionals descend on Abu Dhabi for ADIPEC 2012, Oil & Gas Middle East puts the UAE’s exploration and production activities under the microscope
The UAE’s position as a regional hub for upstream companies is coming under greater threat from business initiatives and opportunities elsewhere in the Gulf, but thanks to a fairly open market and its attributes as a logistical and commercial hub, it still retains its lustre as the location of choice for firms with regional aspirations.
Of course, the resource wealth and opportunity landscape within the UAE is not to be scoffed at, and the dominance of the energy sector cannot be overstated, though unlike some of its neighbours, the UAE has had impressive success in encouraging important non-oil sectors, thanks to decades of commercial, industrial and tourism development drives, which has seen it surpass all of its fellow Gulf economies in most spheres.
The UAE welcomed 2012 as the world’s eighth largest oil producer, churning out an average volume of 2,813,000 barrels per day, and came out fourth in the top global exporters league, exporting around 81% of its total production.
In a tricky year for Iran’s upstream sector, and faced with a dwindling number of markets it has legitimate access to in 2012, it would have been hugely likely the UAE would have claimed the third spot on the podium of top global exporters this year, were it not for Iraq’s rampant rise up the table.
Although it closed out 2011 down in ninth position, Iraq’s new export terminals and partnerships with IOCs, all of which are contractually bound to ramp up production, will likely see it leapfrog the UAE into the top three leaving the country in a solid fourth again this year.
The upstream sector in the other six Emirates is dwarfed by the scale, ambition, and future production plans in Abu Dhabi, the largest Emirate by size, and home to around 95% of the nation’s oil, and 92% of its gas.
Japan remains the country’s main oil customer, accounting for almost 40% of all shipments, though significant sales to South Korea and Thailand, as well as spot cargo sales to many others spread the revenue sources throughout Asia.
In terms of energy for export, the country’s principal investments and capacity increases will come from oil, as skyrocketing domestic energy use means that the bulk of gas developments are being funded to meet rising in-country demand.
The country has had to become a net gas importer of late, bringing in LNG and gas through the cross-border Dolphin Energy pipeline. Its need for gas imports will likely decline when the Shah gas project, being overseen by Al Hosn Gas Development Company (with Oxy as lead IOC partner) comes onstream in 2014. The giant Bab field in Abu Dhabi, also sour and technically challenging, is expected to be green-lit in the coming few years.
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Much oil production in the UAE is from the Zakum oil system, a collection of fields which together make up the third largest oil zone in the world.
The Upper Zakum field is run by ZADCO, 60% owned by ADNOC with the Japanese Oil Development Co. and ExxonMobil holding the remaining stakes.
The largest onshore oil fields are operated by ADCO. ADCO operates the Bu Hasa oil field, which produces as much as 600,000 barrels per day, as well as the Murban Bab, Sahil, Asab, and Shah oil fields, contributing another 705,000 bpd of light, sweet crude.
The Qusahwira and Bab fields are under development by ADCO, adding 250,000 bpd by 2014. ADCO will also redevelop Bida al-Qemzan, adding 20,000 bpd to its current production of 225,000 bpd by Q3 2012.
These projects are components of a plan to boost ADCO’s aggregate production to 1.8 million bpd from its current 1.4 million bpd by 2017.
ADMA-OPCO operates the main offshore assets in Abu Dhabi, which have been in redevelopment to
maximise output. The Umm Shaif and Lower Zakum offshore oil fields have a capacity of 520,000 bpd combined, although after an expansion at each they will have a production capacity of 425,000 bpd and 300,000 bpd, respectively.
Two new oil fields have also come into development: Nasr and Umm al-Lulu. These will add a further 170,000 bpd capacity by 2018, and are providing the local EPC and fabrication markets with a slew of new work.
Dubai and Sharjah produce relatively minor amounts of crude oil.
Despite causing something of a global stir with an announcement in 2010 that the Dubai had struck upon a major discovery, no further details have since come to light.
Dubai is widely thought to produce around 100,000 barrels per day from four separate fields, the older and more abundant Fateh and Southwest Fateh oil fields, with extra production from the Falah and Rashid fields.
Sharjah’s only significant oil field is the Mubarak field, which produces 60,000 bpd.
Sharjah-based Crescent Petroleum operated this field for 35 years before handing control to the government back in December 2009.
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