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
ADVERTISEMENT
More Top Reads from Oilprice.com:
- Failure To Implement Russian Oil Ban Could Send Oil Crashing To $65
- Oil Markets Are Bracing For A Slew Of Bullish News
- High Gasoline And Diesel Prices Are Here To Stay
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