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The Abu Dhabi National Oil Company (ADNOC) of the United Arab Emirates (UAE) is looking to boost its crude oil production capacity to 3.5 million bpd next year, from the current 3-million-bpd capacity, by splitting offshore concessions and bringing in new partners.
The offshore concession, currently operated by the Abu Dhabi Marine Operating Company (ADMA-OPCO) and expiring in March next year, will be split in order to unlock greater value and increase partnership opportunities, ADNOC said on Monday.
But the plans for increased oil production come at a time when OPEC is trying to close ranks and scold non-complying members to make efforts to stick to their production cuts.
As part of the deal, the UAE has pledged to cut 139,000 bpd from its October 2016 and bring production below 2.874 million bpd. However, the UAE has not strictly complied with its share of the cuts in any of the months since the start of the deal in January.
At the end of July, following Saudi Arabia’s pledge to do the same, the UAE announced its plans to reduce oil exports beginning in September of this year.
ADNOC’s plans to rely on offshore development to raise crude oil production are supported by the strategically located Port of Fujairah—the UAE’s only export terminal fully outside the Strait of Hormuz, UPI notes.
Related: Are Strong U.S. Crude Inventory Draws Sustainable?
The Strait of Hormuz is the world’s most important chokepoint, with an oil flow of 18.5 million bpd in 2016, according to the EIA. In 2015, daily flow of oil through the strait accounted for 30 percent of all seaborne-traded crude oil and other liquids.
So the UAE has the Port of Fujairah—the second largest bunkering port in the world after Singapore—to export part of its offshore oil.
In September last year, UAE’s first berth for very large crude carriers (VLCC) started operations at the Port of Fujairah.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.