Country focus: 2011 UAE energy reportby Daniel Canty on Sep 11, 2011
Abu Dhabi upstream development projects steal the limelight in the 2011 review of the UAE’s energy market
Almost one third of the top twenty largest oil and gas projects in the Middle East under execution today are taking place in the Emirates’ booming upstream sphere.
With the exception of a large, pan-national strategic pipeline project, all of the work for those projects is being undertaken in Abu Dhabi, the national epicenter for energy developments.
However, Ras Al Khamaih, Sharjah and Dubai all have operations and development projects, which are significant, and worthy of some attention, not forgetting the vital, and increasing role Fujairah plays in the national energy equation.
The importance of the energy sector cannot be overstated, though unlike its neighbours the UAE has had a large degree of success in encouraging important non-oil sectors, thanks to a decade long commercial, industrial and tourism development drive which has seen it surpass all of its fellow Gulf economies in most spheres.
That said, enormous injections of capital in Qatar and Saudi Arabia mean there is no room for complacency in maintaining its dominant position as a business hub of choice.
Principally thanks to the resource wealth endowed on Abu Dhabi, the federation of seven emirates has become a crucial energy producer, typically exporting around 2.32 million barrels of crude oil each day to predominantly Asian markets.
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 (the country remains an importer of natural gas from neighbouring Gulf countries), means that the bulk of gas developments are being funded to meet rising in-country demand.
The UAE has 97.8 billion barrels, making up 7% of global oil reserves. In late 2008, Occidental Petroleum won the first concession offered in decades, earning the right to develop the Jarn Yahpour and Rahman oil fields (See profile on page 26).
Abu Dhabi National Oil Company (ADNOC), operates 14 subsidiaries which participate at every level of the oil and natural gas sectors. The contract structure is based on a long-term, production-sharing basis, often through joint venture companies.
The most noteworthy of the oil-producing consortia include the Zakum Development Company (ZADCO), the Abu Dhabi Company for Onshore Operations (ADCO), and the Abu Dhabi Marine Operating Company (ADMA-OPCO). International oil majors operating in the UAE include BP, Shell, Total, ExxonMobil, Petrofac, and Partex.
In November 2010, the ruler of Sharjah, Shaikh Sultan bin Muhammad al-Qasimi, issued a decree which created the Sharjah National Oil Corporation (SNOC). The new firm manages those projects formerly operated by Crescent Petroleum in the emirate.