Abu Dhabi Okays $122B Oil and Gas Spending Plan
(Bloomberg) -- The United Arab Emirates is boosting investment to make good on pledges to increase output capacity, even as it struggles against OPEC+ restrictions on supply.
The OPEC member’s top body for energy policy, Abu Dhabi’s Supreme Petroleum Council, approved a 448 billion dirhams ($122 billion) budget for spending on oil and natural gas over the next five years, state media reported on Sunday. The investment plan for Abu Dhabi National Oil Co. will contribute to growth and expansion “in all business areas,” including production, refining and trading.
The OPEC+ oil cartel -- an alliance between the Organization of Petroleum Exporting Countries and others such as Russia -- has sought to cut output among its members after the coronavirus pandemic ravaged economies and caused energy demand to crater. Yet the UAE, like some other petrostates, sees greater oil production as a way to bolster its income and diversify the economy. The country also wants to be able to exploit any scarcity in supply once oil markets recover.
“This is Adnoc demonstrating that they aim to be self-sufficient,” said Jaafar Altaie, managing director of Abu Dhabi-based consultant Manaar Group. “It’s a proactive step that foresees the potential for future supply shortages and that sees a need for low-cost production in the coming years.”
Adnoc, owned by the Abu Dhabi government, pumps almost all the oil in the UAE, OPEC’s biggest producer after Saudi Arabia and Iraq. The company plans to raise daily capacity to 5 million barrels by 2030 from about 4 million barrels. OPEC+ has capped the UAE’s output at roughly 2.6 million barrels a day until the end of the year.
The company discovered an additional 2 billion barrels at conventional fields, according to the state media reports. That brings the UAE’s total reserves of recoverable oil to 107 billion barrels. Adnoc also found an extra 22 billion barrels of unconventional oil, which is harder to extract and may not all be recoverable.
“The increase in the UAE’s conventional oil reserves sends a strong signal that Adnoc is leaving no stone unturned in unlocking value from our abundant hydrocarbon resources,” Chief Executive Officer Sultan Al Jaber said.
Officials in Abu Dhabi, the capital of the UAE, privately floated the idea last week that the nation could leave OPEC, a highly unusual step that would probably destabilize oil markets. Energy Minister Suhail Al-Mazrouei later said the UAE “has always been a committed member,” though he didn’t address the country’s future in the cartel.
OPEC+ members meet next week to decide whether to increase output in January, easing curbs started in May at the height of the pandemic. They may be forced to delay the hike as the virus continues to sap demand for energy.
Adnoc’s new budget is an increase from the previous one, according to state media. In 2018, Adnoc said the SPC had earmarked 486 billion dirhams for investments from 2019-23, the last period for which the company provided such information.
The Abu Dhabi government also gave approval for Adnoc to develop hydrogen as a low-carbon source of energy.
© 2020 Bloomberg L.P.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- ExxonMobil Racks Up Discoveries in Guyana Block Eyed by Chevron
- Oil Market Sentiment Has Improved Significantly
- EU, US Eye Collaboration on Nuclear Materials
- USA Driving Activity to Increase to All-Time Highs
- TC Energy to Sell Prince Rupert Gas Pipeline Project to First Nation
- EU Electricity Export to Ukraine Up 94 Percent in Two Years
- China Coal Output Falls for First Time since Government Ordered More
- BP Pulse Buys One of Europe's Largest Truck Stops
- UK CCUS Plans Outdated: Think Tank
- North America Enters Rig Loss Streak
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- EIA Drops 2024 Henry Hub Gas Price Forecast
- EIA and Standard Chartered Offer Up Latest Oil Price Predictions
- Red Sea Region Sees Another Watershed Incident
- Chevron Oil Project in Kazakhstan to Cost $48.5B
- OPEC Voices Encouragement after IEA Affirms Support for Oil Security
- Biden Govt Bares Strategy for Freight Charging, Hydrogen Fueling Infra
- Rystad Looks at the Buzz Around White Hydrogen
- Ukraine Hits Third Russian Refinery In Escalating Drone Strikes
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Is Peak Oil Demand Close?
- Vessel Sinks in Red Sea After Missile Strike
- JP Morgan, Standard Chartered Reveal Latest Oil Price Forecasts
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Rystad Forecasts Net Production of Top Permian Producers in 2024
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension