Following Russia’s invasion of Ukraine in February, persistently high gas prices around the world have prompted several leading oil-suppliing countries in the Middle East to increase their gas and oil production. The emirate of Abu Dhabi is a case in point, as last week Abu Dhabi National Oil Company (ADNOC) awarded a $980 million contract to ADNOC Drilling to bolster the number of rigs to support ADNOC’s expansion of oil and gas production capacity. This followed just a few days earlier the award of a $1.53 billion contract by ADNOC for the same purpose. Both contracts and a similar $3.43 billion contract awarded by the same company in August went to local companies, the most recent two of which went to ADNOC Drilling. This is part of ADNOC’s In-Country Value (ICV) program, which aims to support local economic growth and diversification. This program, in turn, is the basis for the “Operation 300 Billion” program, which aims to increase the share of the country’s industrial sector to AED 300 billion ($81 billion) from the current 133 billion dirhams over the next 10 years. This goal, which is part of the UAE Circular Economy Policy 2021-2031, is to be achieved largely through the establishment of 13,500 industrial companies during this period, spanning the manufacturing, construction, electricity, gas, mining and quarrying sectors. According to a recent statement from the UAE Central Bank, the country’s real total output is expected to grow by 4.2 percent in 2022, and non-hydrocarbon GDP is expected to grow by 3.9 percent over the same period. Such an investment is part of ADNOC’s drive to increase oil production capacity to five million barrels per day (bpd) by 2030 from just over three million barrels per day today and enable the UAE to become gas self-sufficient.
Related: Chinese refineries invest heavily in European fuel demand These efforts by the UAE continue to attract major foreign partners to develop key oil and gas fields. Just last month, Italian oil and gas giant Eni CEO Claudio Descalzi met his ADNOC counterpart Sultan al-Jaber in Abu Dhabi to discuss speeding up the development of the Ghasha sour gas project. Offshore Block 2 project. The Ghasha concession is the world’s largest offshore sour gas development, covering not only the Ghasha field itself, but also the Hail, Hair Dalma, Satah, Bu Haseer, Nasr, SARB, Shuwaihat and Mubarraz fields. Its first production was expected to begin in 2025, with the goal of producing at least 1.5 billion cubic feet per day (bcf/d) of gas by 2030. Eni owns the largest foreign stake in ADNOC-led gas. The project with a 25 percent ownership, followed by German Wintershall Dea (10 percent), Austrian OMV (5 percent) and Russian Lukoil (5 percent).
This push for self-sufficiency in the gas sector received a boost after the 2020 discovery of a huge shallow gas field in Jebel Ali, which according to the companies developing the site – ADNOC and the Dubai Supply Authority – holds about 80 trillion cubic feet of gas in a 5,000 square kilometer area between Abu Dhabi and Dubai. After this, the hunt for large gas deposits accelerated, and not only in the vicinity of previous discoveries. Another of the UAE’s constituent emirates, Sharjah, also recently announced proposals to launch an offshore bidding round for its new gas and condensate discovery. The tender, officially scheduled to start in early 2023, relates to Sharjah’s Block B, which is jointly operated by Eni and state-owned Sharjah National Oil Corp (SNOC). In late 2020, the companies discovered the Mahani reservoir, and subsequent first drilling produced up to 1.4 million cubic meters per day (mcm/d) of lean gas and associated condensate. First gas was also produced this year from the Mahani-1 gas well, but the companies did not release volumes, although SNOC said it was still limiting Mahani-1 production below 1.4 million cubic meters per day to collect data. and maps the entire potential of the tank. The two companies, which also work together in the onshore concession areas A and C, will continue to drill further, according to a SNOC statement, with the company recently adding that preliminary seismic data on the development shows “significant” reserves that are “highly economic” to produce and develop .
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Offshore Block 2, another of the major projects recently accelerated, along with the Ghasha sour gas project, also includes Eni as the main owner with a 70 percent stake (the rest is held by Thailand’s PTTEP). In late July, a new, deeper reservoir was discovered that indicated 1.0 to 1.5 trillion cubic feet (tcf) of crude gas, nearly doubling the volume of the discovered field. Comment from ADNOC at the moment. The July discovery follows a February discovery from a shallower target and brings the total potential gas discovered in Block 2 to 2.5-3.5 tcf. Eni also operates in other offshore areas in Abu Dhabi and Ras Al Khaimah, another in the United Arab Emirates.
Coinciding with these initiatives to boost gas production, ADNOC in March awarded the first $653 million in new framework contracts that will allow it to drill thousands of new oil wells. The contracts were awarded to Haliburton Worldwide Limited Abu Dhabi, Baker Middle East, Emirates Western Oil Well Drilling & Maintenance Co, NESR Energy Services and Emjel Oil Field Services following a competitive bidding process. These awards, in turn, followed ADNOC’s $946 million engineering, procurement and construction (EPC) contracts to the UAE’s own National Petroleum Construction Company (NPCC) to carry out the work required to maintain Umm Shaif’s 275,000 bpd crude oil production capacity. and then increase this production. Like OilPrice.com reported exclusively in August 2020 – shortly before the “relations normalization agreement” was signed between the UAE and Israel – ADNOC announced the transfer of ownership of its Lower Zakum and Umm Shaif and Nasr offshore concessions from China National Petroleum Corporation (CNPC) holdings to China National Offshore Oil Corporation (CNOOC) subsidiary CNOOC Limited. This occurred through CNOOC acquiring a 40% stake in CNPC’s majority-owned subsidiary PetroChina Investment Overseas (Middle East) Ltd (PetroChina) through its holding company CNOOC Hong Kong Holding Limited (CNOOC HK). This deal marked the first time a Chinese offshore oil and gas company had joined any ADNOC concession.
Continued activity in the Ala Zakum and Umm Shaif and Nasr offshore licenses has been reflected in the rapid development of the Block 4 onshore license following the recent revelation that the block’s new discovery area is likely to contain exploitable reserves. at least 480 million barrels, according to Japan’s INPEX. This figure is based on a provisional recovery rate of 40 percent crude oil and 70 percent natural gas and condensate. This marked the first such discovery offshore Block 4, and ADNOC said early signs suggest more discoveries may well be made at the site.
Are there any such initiatives from Middle Eastern countries sufficient to prevent oil and gas supply problems once winter fully sets in, remains to be seen, although the UAE has signed significant new deals with Germany and France very recently. By from local UAE sourcesFollowing a visit by Scholz and German Economy Minister Robert Habeck, as part of the new Energy Security and Industry Accelerator agreement signed between the UAE and Germany, Abu Dhabi National Oil Company (ADNOC) will deliver a late LNG cargo to RWE. 2022 for use at the country’s floating LNG import terminal in Brunsbuttel. ADNOC has also booked several other LNG cargoes for delivery to German customers in 2023, the same sources said. France’s TotalEnergies, on the other hand, recently signed a partnership agreement with ADNOC, which includes cooperation in trade, product delivery and carbon capture, use and storage. As TotalEnergies stated when signing the partnership agreement with ADNOC: “[The agreement includes] the development of oil and gas projects in the UAE to ensure sustainable energy access to the market and promote global energy security.”