Several UAE energy firms are hoping to boost their oil output in the coming years, aiming to meet ongoing international demand as other world powers move away from fossil fuels to renewable alternatives. As the third-largest oil producer in OPEC, the UAE has extensive experience in oil and gas, with companies aiming to expand operations abroad and profit from the country’s extensive reserves.
Abu Dhabi’s state-owned oil firm Adnoc is investing heavily in increasing its oil production by 2030. Last month it established a new debt issuing unit to manage project funding and increase production to around 5 million bpd by 2030, compared to 4 million bpd today. To achieve this figure, Adnoc says it will need to drill 700 wells every year. The new unit "intends to closely monitor market conditions and explore potential funding opportunities."
Adnoc, the UAE’s largest oil producer, previously stated it will spend $127 billion between 2022-2026 to expand its oil operations and develop its low-carbon oil business. At present, the country is thought to hold reserves of 111 billion barrels of oil and 289 Tcf of gas, which several companies are hoping to exploit while it remains profitable over the next decade.
As one of the world’s fastest-growing oil companies, recording 19 percent brand value growth, Adnoc is well-positioned to develop its oil operations. It is currently said to be the second most valuable brand in the Middle East and Africa region after Saudi Aramco. This means it has public confidence as it goes ahead with expansion plans.
Just this month, Adnoc awarded $1.94 billion to support its drilling operations. The funds have been divided between Adnoc Drilling – receiving the majority - and US companies Schlumberger, Halliburton, and Weatherford. This will fund wireline logging and perforation services at the oil firm’s onshore and offshore operations for five years, with the option to extend the project for a further two years.
Related: Oil Prices Will Hit $100 And Stay There - Vitol CEO
Adnoc’s CEO, Sultan al-Jaber, explained "The framework agreements are a continuation of Adnoc's unprecedented investment in services to enable the expansion of drilling activity required to responsibly unlock the UAE's leading low-cost and low-carbon intensity oil as well as the nation's gas resources." In addition, “Not only do these awards support our 2030 strategy, but they are also expected to deliver over 80% of in-country value to the UAE, and align with the UAE’s ‘Principles of the 50’ economic blueprint for sustainable growth,” he stated.
This follows an investment from the firm in December of $3.8 billion for onshore drilling, workover, and well services to Adnoc Drilling and a $6bn investment for wellheads and related components, downhole completion equipment, and related services in November. It also signed a 10-year contract with France's TechnipFMC for wellheads, trees, and services, at a cost of $1 billion.
But Adnoc is not the only UAE company looking to increase its oil operations. This month, Dubai’s Dragon Oil announced a new oil discovery in Egypt’s Gulf of Suarez reserves, as it expands its foreign oil operations. The field is believed to contain around 100 million barrels of crude, marking one of the biggest discoveries in the region in the past two decades.
Dragon entered Egypt in 2019 when it acquired BP’s Gulf of Suez assets. By 2021 it was producing an average of 60,000 bpd, with aims to increase this figure to between 65,000-70,000 bpd based on the new discovery.
Chairman of Dragon Oil, Saeed Mohammed Al Tayer, stated “We are glad to announce our first oil discoveries in Egypt, and we aspire to more success during the coming period. We will continue to work for more discoveries sustainably in the promising Egyptian market to create long-term value for the benefit of all.”
Abu Dhabi’s National Energy Company, Taqa, also saw experienced growth last year as doubled its profits in 2021, achieving $1.63 billion compared to $760 million in 2020. Its oil production levels reached 122,400 bpd. This demonstrates the success of its 2030 strategy for sustainable growth and returns, according to the company.
And at the end of last year, Adnoc and TAQA announced a $3.6 billion project to decarbonize offshore operations in support of the UAE’s target for net-zero carbon emissions by 2050. A first-of-its-kind sub-sea transmission network is expected to help reduce the companies’ offshore carbon emissions by around 30 percent. The move to produce lower carbon oil will also help the UAE maintain its place as an international oil major as several powers push for energy with lower greenhouse gas emissions.
As the UAE shows no signs of slowing in its oil production, companies from Abu Dhabi and Dubai are expanding their oil and gas operations both at home and abroad. Investing heavily in exploration projects is expected to increase the UAE’s output over the next decade, while moves to decarbonize will help the country to meet targets on its way to net-zero.
By Felicity Bradstock for Oilprice.com
More Top Reads From Oilprice.com:
- What “Energy Independence” Really Means For The U.S.
- Middle Eastern Oil Nations Hike Prices As Production Falters
- 5 Commodities That Could Explode As The Ukraine Crisis Escalates