Abu Dhabi ramps up gas production ahead of winter

Continued high global gas prices following Russia’s invasion of Ukraine in February prompted some major Middle Eastern oil suppliers to ramp up gas and oil production. The Emirate of Abu Dhabi is a case in point, where Abu Dhabi National Oil Company (ADNOC) last week signed a $980 million contract with ADNOC Drilling to increase the rig count to support ADNOC’s oil and gas capacity expansion . Just a few days ago, ADNOC awarded a $1.53 billion contract for the same purpose. Both contracts awarded by the same firm in August and a similar $3.43 billion contract were awarded to local firms, with the most recent two going to ADNOC Drilling. This is part of ADNOC’s Domestic Value (ICV) program, which is designed to support local economic growth and diversification. The plan, in turn, is the cornerstone of the “300 billion action”, which aims to increase the contribution of the country’s industrial sector to AED300 billion ($81 billion) over the next 10 years from the current AED133 billion. This target itself is part of the UAE’s Circular Economy Policy 2021-2031 and will be achieved in large part through the creation of 13,500 industrial companies during this period, covering manufacturing, construction, electricity, gas, mining and quarrying. According to a recent statement from the UAE Central Bank, the country’s real GDP is expected to grow by 4.2% in 2022, while non-hydrocarbon real GDP will grow by 3.9% over the same period. Such investments are part of ADNOC’s push to expand oil production capacity from just over 3 million barrels per day (bpd) currently to 5 million barrels per day (bpd) by 2030 and make the UAE gas self-sufficient.

Related: Chinese refiners bet on European fuel demand These efforts by the UAE also continue to attract prominent foreign partners to develop its key oil and gas fields. Just last month, the CEO of Italian oil and gas giant Eni, Claudio Descalzi, met his counterpart from ADNOC, Sultan al-Jaber, in Abu Dhabi to discuss accelerating the development of the Ghasha sour gas project, and Offshore Block 2 Project. The Ghasha Concession is the world’s largest offshore sour natural gas development and includes not only the Ghasha field itself, but also the Hail, Hair Dalma, Satah, Bu Haseer, Nasr, SARB, Shuwaihat and Mubarraz fields. Its first production is expected to begin in 2025, with a goal of producing at least 1.5 billion cubic feet per day (bcf/d) of natural gas by 2030. Eni is the largest foreign stakeholder project led by ADNOC with a 25% stake, followed by Germany’s Wintershall Dea (10%), Austria’s OMV (5%) and Russia’s Lukoil (5%).

The gas industry’s drive to become self-sufficient has been reinvigorated after the discovery of a huge shallow gas field in Jebel Ali in 2020 The 5,000-square-kilometer area between Abu Dhabi and Dubai contains 80 trillion cubic feet of natural gas. Since then, the search for larger-scale gas deposits has accelerated, not just around previous discoveries. Sharjah, another constituent emirate of the UAE, also recently announced a proposal to launch a round of offshore tenders for its new gas and condensate discoveries. The bid, scheduled to open in early 2023, involves Sharjah’s Block B, which is jointly operated by Eni and the state-owned Sharjah National Oil Company (SNOC). In late 2020, the two companies discovered the Mahani Reservoir, and subsequent initial drilling produced up to 1.4 million cubic meters per day (mcm/d) of lean gas and associated condensate. The Mahani-1 well also produced its first gas this year, but the companies have not released production figures, although SNOC did say it would continue to limit Mahani-1 production below 1.4 mcm/d to collect data and map the reservoir’s full potential. The two companies will continue to drill two new wells in onshore concessions A and C, according to a statement from SNOC, which recently added that preliminary seismic data from the development showed “significant” reserves, production and development. would be “very economical”.

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Offshore Block 2 is the second major project recently earmarked for fast-tracking, along with the Ghasha sour gas project, where Eni is also a major shareholder with a 70% stake (the rest is held by Thailand’s PTTEP). A new, deeper reservoir was discovered at the end of July with 1.0-1.5 trillion cubic feet (tcf) of raw natural gas reserves, nearly double the reserves of discovered fields, according to a study. ADNOC’s Reviews then. The July discovery follows from a shallower target in February and brings the total potential gas discovery in Block 2 to 2.5-3.5 tcf. Eni also operates in other offshore locations in Abu Dhabi and another UAE emirate, Ras Al Khaimah.

These moves to boost gas production come as ADNOC awarded an initial $653 million contract in a new framework agreement back in March, enabling it to drill thousands of new wells. The agreements were reached following a tendering process with Halliburton Global Limited Abu Dhabi, Baker Middle East, Emirates West Well Drilling and Maintenance, NESR Energy Services and Emgyr Oilfield Services. The awards, in turn, come after ADNOC awarded a $946 million Engineering, Procurement and Construction (EPC) contract with the UAE’s own National Petroleum Construction Company (NPCC) to carry out the work necessary to maintain Umm Shaif’s 275,000 per day barrels of crude oil production capacity then increases this output. as OilPrice.com August 2020 Exclusive Report – Shortly before the UAE and Israel signed a “Normalization Agreement” – ADNOC announced that it will take ownership of its Lower Zakum and Umm al-Sha’if and Nasr offshore concessions from a controlling stake in China National Petroleum Corporation (CNPC) Transferred to CNOOC Limited, a subsidiary of China National Offshore Oil Corporation (CNOOC). CNOOC, through its holding company CNOOC Hong Kong Holdings Limited (CNOOC HK), has acquired a 40% stake in PetroChina Overseas Investment (Middle East) Limited (CNPC), a subsidiary of PetroChina Holdings. The deal marks the first time a dedicated Chinese offshore oil and gas company has joined any ADNOC concession.

Continued activity in the Lower Zakum and Um Shev and Nasr offshore concessions is reflected in the rapid development of the Block 4 onshore concession, following news that a newly discovered area of ​​the block may have a potential property, according to the site. Operator Japan INPEX said there were at least 480 million barrels. This figure is based on an interim recovery factor of 40% crude oil and 70% natural gas and condensate. According to ADNOC, this marks the first such discovery in the Block 4 onshore concession, with initial indications that more discoveries are likely to be made at the site.

Would such a move by Middle Eastern countries be enough to avoid oil and gas supply problems While the UAE has recently struck major new deals with Germany and France, it remains to be seen as winter rolls around in full force.according to Local UAE ResourcesThe Abu Dhabi National Oil Company (ADNOC) will supply RWE with LNG cargoes later in 2022 as part of the UAE-Germany New Energy Security and Industry Accelerator Agreement, following visits by Scholz and German Economy Minister Robert Habeck. For the country’s floating LNG import terminal at Brunsbüttel. ADNOC has also earmarked several other LNG cargoes for German customers for delivery in 2023, the same source said. Meanwhile, France’s TotalEnergies recently signed a cooperation agreement with ADNOC, which includes cooperation in trade, product supply and carbon capture, utilization and storage. As TotalEnergies said when signing the partnership agreement with ADNOC: “[The agreement includes] Develop oil and gas projects in the UAE to ensure a sustainable energy supply to the market and contribute to global energy security. ”