Exxon Sees Major Cost Savings on Abu Dhabi Oil Field

Upper Zakum Field
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ABU DHABI (Zawya Dow Jones), Nov. 10, 2009

Exxon Mobil Corp. expects to save billions of dollars at its massive Upper Zakum oil field development in Abu Dhabi from building artificial islands instead of steel platforms for drilling, a senior company executive said Monday.

Exxon, which alongside Abu Dhabi National Oil Co. and Japan's Inpex Corp. holds a stake in Zakum Development Co., or Zadco, the company developing the field, plan to dredge the islands offshore in the Persian Gulf instead of using steel structures.

"We are moving away from building many, many steel platforms to building islands," Frank Kemnetz, vice president for ExxonMobil Upstream Ventures in the Middle East, told an Abu Dhabi conference organized by London-based Middle East Economic Digest.

"These islands are going to reduce costs. If you look at the long term, it's billions of dollars," Kemnetz later told reporters on the event's sidelines. He didn't say how much the saving would be.

Zadco plans to boost production capacity at the Upper Zakum field to 750,000 barrels a day by 2015. Zakum, which comprises the Upper Zakum and the Lower Zakum fields, is the second-largest field in the Persian Gulf and the fourth-largest oil field in the world.

Exxon owns 28% in Zadco, while Japan's Inpex Corp. holds a 12% stake and Adnoc 60%.

A final investment decision on the project is yet to be made, with "multiple contracting authorities" handling the tendering of engineering, procurement and construction, or EPC, contracts, Kemnetz said.

The project is on track to award early production facilities in late 2010, he added. "Everything is on track and the plans are moving forward."

Copyright (c) 2009 Dow Jones & Company, Inc.

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