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ADNOC commits $122 billion to boost oil and gas output

ADNOC commits $122 billion to boost oil and gas output

 

The United Arab Emirates’ biggest oil producer is boosting investment to make good on pledges to increase output capacity, even as it struggles against OPEC+ restrictions on supply.

The OPEC member’s top body for energy policy, Abu Dhabi’s Supreme Petroleum Council, approved a 448 billion dirhams ($122 billion) budget for spending on oil and natural gas over the next five years, state media reported on Sunday. The investment plan for Abu Dhabi National Oil Co. will contribute to growth and expansion “in all business areas,” including production, refining and trading.

The OPEC+ oil cartel -- an alliance between the Organization of Petroleum Exporting Countries and others such as Russia -- has sought to cut output among its members after the coronavirus pandemic ravaged economies and caused energy demand to crater. Yet the United Arab Emirates, like some other petrostates, sees greater oil production as a way to boost its income and diversify the economy. The country also wants to be able to exploit any scarcity in supply once oil markets recover.

“This is ADNOC demonstrating that they aim to be self-sufficient,” said Jaafar Altaie, managing director of Abu Dhabi-based consultant Manaar Group. “It’s a proactive step that foresees the potential for future supply shortages and that sees a need for low-cost production in the coming years.”

ADNOC, owned by the Abu Dhabi government, pumps almost all the oil in the UAE, OPEC’s biggest producer after Saudi Arabia and Iraq. The company plans to raise daily capacity to 5 million barrels by 2030 from about 4 million barrels. OPEC+ has capped the UAE’s output at roughly 2.6 million barrels a day until the end of the year.

The company discovered an additional 2 billion barrels at conventional fields, according to the state media reports. That brings the country’s total reserves of recoverable oil to 107 billion barrels. ADNOC also found an extra 22 billion barrels of unconventional oil, which is harder to extract and may not all be recoverable.

“The increase in the UAE’s conventional oil reserves sends a strong signal that ADNOC is leaving no stone unturned in unlocking value from our abundant hydrocarbon resources,” Chief Executive Officer Sultan Al Jaber said.

Officials in Abu Dhabi, the capital of the UAE, privately floated the idea last week that the nation could leave OPEC, a highly unusual step that would probably destabilize oil markets. Energy Minister Suhail Al-Mazrouei later said the UAE “has always been a committed member,” though he didn’t address the country’s future in the cartel.

OPEC+ members meet next week to decide whether to increase output in January, easing curbs started in May at the height of the pandemic. They may be forced to delay the hike as the virus continues to sap demand for energy.

ADNOC’s new budget is an increase from the previous one, according to state media. In 2018, ADNOC said the SPC had earmarked 486 billion dirhams for investments from 2019-23, the last period for which the company provided such information.

The Abu Dhabi government also gave approval for ADNOC to develop hydrogen as a low-carbon source of energy.

Source: World Oil

Read the latest issue of the OGV Energy magazine HERE.

Published: 23-11-2020

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