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Cyril Widdershoven

Cyril Widdershoven

Dr. Cyril Widdershoven is a long-time observer of the global energy market. Presently, he holds several advisory positions with international think tanks in the Middle…

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Slew Of New Discoveries Brings UAE Closer To Production Goals

  • ADNOC reported 3 high-grade crude oil discoveries in onshore concessions.
  • Earlier this year, ADNOC reported natural gas finds together with ENI.
  • The UAE is looking to expand its oil production capacity to 5 million bpd by 2030.

At a time that global oil markets are worried about a demand-supply crunch, especially when looking at low spare production capacity and divestments of IOCs, Abu Dhabi’s oil and gas giant ADNOC once again is showing its future power. 

The national oil company, led by Sultan Al Jabr, announced that it has made three new crude oil discoveries during an ADNOC executive committee meeting. ADNOC reported that the largest discovery was made at the known Bu Hasa onshore oilfield, which is a part of the ADNOC onshore concession. At present, the largest ADNOC onshore field, already has a production capacity of 650,000 bpd. The new 500 million barrels of oil discovered, according to ADNOC, have unlocked a new formation in the field, offering new premium-grade Murban oil resources. 

At the same time, the ADNOC-Occidental Petroleum JV on Onshore Block 3 has reported an 100 million barrels of oil discovery, the second one in the concession. U.S. oil major Occidental was awarded the concession of Onshore Block 3 in 2019. 

Another, smaller, discovery was made by ADNOC’s JV with Korea National Oil Company and GS Energy which reported a find of around 50 million barrels of “light and sweet Murban-quality” crudes. 

2022 is already a major exploration success year, as earlier this year ADNOC and ENI reported a natural gas discovery on Offshore Block 2. Based on initial results, as ADNOC reported, the discovery is estimated to be between 1.5-2 trillion cubic feet (Tcf). In December 2021, Japan’s Inpex and ADNOC reported a 1 billion boe discovery on Onshore Block 4

Related: Oil Set For Fourth Weekly Gain Amid Tight Fuel Markets

For Abu Dhabi, the above-mentioned discoveries are crucial as ADNOC is targeting a major production expansion of its oil and gas fields. At the same time, Abu Dhabi is trying to diversify its upstream JVs away from the former Western-focused majors, to a new line of Asian operators. Chinese and Indian parties are being targeted, while Russian operators also have an eye on the Emirates. The former Western focus was based on pure geopolitical and commercial facts, but as Asia has become the main market for ADNOC and others in the Emirates, expanding on all levels is a necessity. Locking in Asian markets and consumers, like Saudi Arabia, Qatar and others are doing too, is seen as a sustainable strategy. 

In the coming years, a multibillion-dollar production and exploration expansion strategy is being implemented to reach a potential production capacity of 5 million bpd by 2030, compared to around 4 million bpd at present. 

Analysts are also keeping an eye on Abu Dhabi’s possible changes in strategy and investment focus, as Abu Dhabi’s Crown Prince Mohammed bin Zayed has been appointed as the UAE’s new president. Possible changes are imminent, as seen by a higher profile of Khaled bin Mohamed bin Zayed Al Nahyan. A change in ADNOC’s overall strategy is not expected, especially not as long as Sultan Al Jabr is in control. Khaled and Sultan seem to be able to read and write together with their eyes closed. Still, MBZ’s new position will leave some gaps to be filled, including in the energy and investment spheres. 

By Cyril Widdershoven for Oilprice.com

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  • Mamdouh Salameh on May 22 2022 said:
    By Middle Eastern standards ADOC’s new oil discoveries amounting in total to 650 million barrels a day are not much but they would still offset an average annual depletion rate estimated at 5%-6% in Abu Dhabi’s oilfields.

    UAE is currently producing an estimated 3.1 million barrels a day (mbd) against an OPEC+ production quota of 3.5 mbd allocated to it in 2021 meaning that the UAE could be able in time to raise its production by 400,000 barrels a day (b/d) to 3.5 mbd.

    However, achieving a 5.0-mbd production is virtually impossible even with the latest
    technology given the age of the oilfields which were discovered more than 64 years ago.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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