Abu Dhabi oil investment at record high in 2011

Abu Dhabi’s investments in its immense hydrocarbons sector swelled to a record high of more than Dh48 billion at the end of 2011 as the emirate is intensifying a drive to expand its hydrocarbon output capacity, according to official data.

The investments last year were nearly 11.5 per cent above the capital at the end of 2010 and almost seven times the emirate’s oil investment in 2005, when it stood at only around Dh7.2 billion, the Abu Dhabi Statistics Bureau said.

It was also more than double the hydrocarbon investment of around
Dh18.5 billion in 2008, when crude prices climbed to their highest average of $95.

The Bureau’s annual report showed the gross fixed capital formation
(GFCF) in the emirate’s hydrocarbon industry stood at Dh48.79 billion at the end of 2011, up from Dh43.72 billion at the end of 2010.

Last year’s GFCF accounted for almost a quarter of the total fixed capital formation of about Dh199 billion, which was the highest in the emirate.

Abu Dhabi is the main oil producer in the UAE, which aims to boost its crude output capacity above three million barrels per day in the next few years.

Official figures showed Abu Dhabi alone planned to pump more than $10 billion during 2005-2011 into crude oil expansion projects, which target both its onshore and offshore areas, mainly the super-giant Upper Zakum and other major fields.

Around $1.5 billion (Dh5.5 billion) had been allocated for the development of the offshore Upper Zakum to add 200,000 bpd to its
550,000 bpd capacity.

An equivalent sum has also been earmarked for the expansion of the mammoth Umm Shaif offshore field and $two billion for the Nasr Field development by the Abu Dhabi Marine Oil Company (ADMA-OPCO).

The Abu Dhabi Onshore Oil Company (ADCO), one of the largest 10 oil companies in the world, is investing nearly Dh5.5 billion into its Phase 1 Development Programme, which will add about 400,000 bpd to its output.

The projects are part of an ongoing programme by the UAE, a key OPEC member, to expand its sustainable crude oil capacity, which official sources estimated at nearly 2.8 million bpd at the end of 2010.

While such projects will boost capacity to well above three million bpd in four years, there are plans to push ahead with expansions to reach 3.5 million bpd in the long term to tap the country’s massive hydrocarbon reserves of nearly 98.7 billion barrels, more than eight per cent of the world’s total proven oil wealth.

The figures showed the non-oil industrial sector was the second largest capital recipient in Abu Dhabi last year, with around Dh28.4 billion.

It was followed by the electricity and water sector, which received nearly Dh18.2 billion. Investments stood at Dh17.4 billion in real estate and business services, around Dh12.5 billion in transport and communications, Dh4.8 billion in construction and about Dh2.59 billion in social and personal services.

In a recent study, a US government department said mega projects in the UAE could boost its production of crude oil, condensates and other conventional energy sources to a record high of around 3.5 million barrels per day (bpd) in 2015 to maintain its position as one of the world’s largest hydrocarbon suppliers.

The UAE pumped nearly 2.8 million bpd of crude and other energy sources in 2010-2011 and the increase in output in the following years will be needed to face growth in global demand and possible decline in other sources.

Figures by the Energy Information Administration (EIA) of the US Department of Energy assumed a reference oil price scenario of between
$100 and $150 for the UAE’s future oil supply as output could be lower in case of high prices.

In its annual energy outlook report, EIA expected the UAE’s oil and condensates production to slip to around 3.5 million bpd in 2020 and remain unchanged in 2025 before falling back to 3.3 million bpd in 2030.

In the high price scenario, involving prices of between $150 and $200 a barrel, production was projected at 3.2 million bpd in 2015 and 3.3 million bpd in 2020. EIA forecast output at 3.4 million bpd in 2025 and 3.2 million bpd in 2030.

In the low price case of between $50 and $100 a barrel, the UAE’s oil and condensates output could be as high as 3.9 million hpd in 2015 on the grounds low prices will spur global oil demand. The report expected output to remain unchanged in 2020 before sliding to 3.7 and
3.4 million bpd in 2025 and 2030.

In the reference case, Saudi Arabia, the world’s dominant oil exporter, is projected to produce 11.6 million bpd in 2015, around
12.8 million bpd in 2020 and as high as 13.9 million bpd and 14.6 million bpd in 2025 and 2030.

Emirates 24|7 2012, Nov 14 2012