ADNOC to increase oil production capacity to 4 mmbpd by end of 2020
- Business & Finance
Abu Dhabi’s Supreme Petroleum Council (SPC) has approved Abu Dhabi National Oil Company’s (ADNOC) new integrated gas strategy and plans to increase its oil production capacity to 4 million barrels per day (mmbpd) at the end of 2020 and 5mmbpd by 2030.
The SPC is the highest governing body of the oil and gas industry in Abu Dhabi. The Council formulates, approves and oversees the implementation of Abu Dhabi’s petroleum policy and follows up its implementation across all areas of the petroleum industry to ensure that the set goals are achieved.
The SPC meeting was presided over by Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the United Arab Emirates (UAE) Armed Forces and Vice-Chairman of the SPC.
ADNOC said on Sunday that the SPC’s approval of its gas strategy will add potential resources that will enable the UAE to achieve gas self-sufficiency, with the aim of potentially transitioning to a net gas exporter.
New oil & gas discoveries
At its meeting, the SPC announced new discoveries of gas in place, totaling 15 trillion standard cubic feet. It also announced new discoveries of 1 billion barrels of oil in place and approved ADNOC’s new five-year business plan and capital investment growth of AED 486 billion ($132.33 billion) between 2019-2023.
The gas strategy will sustain LNG production to 2040 and allow ADNOC to seize incremental LNG and gas-to-chemicals growth opportunities, where they arise, from the UAE’s dynamic demand/supply position and evolving energy mix, said ADNOC.
ADNOC’s integrated oil and gas strategy underpins its AED 165 billion Downstream investment plans announced in May, which will see the company triple production of petrochemicals to 14.4 million tons per annum by 2025.
Meanwhile, the announcement of the discovery of significant new oil reserves endorses the Abu Dhabi government’s historic decision, earlier this year, to open six geographical oil and gas blocks for competitive bidding. Based on existing data from detailed petroleum system studies, seismic surveys, log files and core samples from hundreds of appraisal wells, estimates suggest these new blocks hold multiple billion barrels of oil and multiple trillion cubic feet of natural gas. The first exploration and production licenses are expected to be awarded in the first quarter of 2019.
The successful bidders will enter into agreements granting exploration rights and, provided defined targets are achieved in the exploration phase, be granted the opportunity to develop and produce any discoveries with ADNOC, under terms set out in the bidding package.
Dr. Al Jaber said: “The incremental increase in our oil production capacity will enable ADNOC to continue to be a reliable and trusted energy supplier that has the flexibility and capacity to respond and capitalize on the forecasted growth in demand for crude.”
Industry projections, Dr Al Jaber highlighted, validate ADNOC’s integrated oil and gas strategy. For the first time, the world is on the verge of consuming 100 million barrels of oil per day, with oil consumption increasing by an additional 10 million barrels per day by 2040, he said. Over the same period, demand for natural gas will increase by 40 percent, while the market for higher-value polymers and petrochemicals will grow by 60 percent.
Unlocking new gas resources
ADNOC said that the integrated gas strategy is the first time in ADNOC’s history it has been in a position to commercially and holistically unlock its abundant new gas resources. One of the challenges in developing parts of ADNOC’s gas resources is the ‘sourness’ of parts of Abu Dhabi’s gas.
However, a number of factors, including the gas pricing reforms introduced in 2016, enabling more market-based pricing, the availability of more advanced technology and ADNOC’s experience in developing sour gas reservoirs are making it possible for ADNOC to unlock more gas resources and increasing value extraction.
Under the new gas strategy, ADNOC will develop the Hail, Ghasha and Dalma project that taps into Abu Dhabi’s Arab formation, which is estimated to hold multiple trillions of cubic feet of recoverable gas. The project is expected to produce more than 1.5 billion cubic feet of gas per day. ADNOC will also unlock other sources of gas, which include Abu Dhabi’s gas caps and unconventional gas reserves, as well as new natural gas accumulations, which will continue to be appraised and developed as the company pursues its exploration activities.