UAE's oil and gas industry strengthens national economy

Abu Dhabi, June 20, 2013 (WAM) - The UAE planned to increase its crude oil production capacity to 3.5 million barrels per day (bpd) by 2017 to contribute to the stability of global markets and to ensure long-term obligations with consumers, as world oil demand is expected by the national oil industry leaders to increase to 105 million bpd by 2030 and even up to 112 million bpd according to optimistic scenarios. Ways to reach this target were explained by senior officials from the national oil industry at the 21st Annual Middle East Petroleum and Gas, which was held in Abu Dhabi on April 22nd, 2013. The Minister of Energy, Suhail bin Mohammed Faraj Faris Al Mazrouei, in his speech at the conference, said: "the UAE is seeking to increase its production capacity to 3.5 million barrels per day of crude oil to contribute to the stability of global markets and ensure the long-term obligations to consumers." The recent events, he added, have proven that focusing on the security of energy is necessary in order to address natural disasters and geopolitical tensions as well as other unanticipated situations which occur periodically in the world, the minister noted. "In this regard the government of the UAE undertook to construct an oil pipeline connecting Habshan-Fujairah to guarantee crude oil supplied to the world market." According to him, success in the application of these technologies has generated new horizons in oil and gas production. As a consequence hydrocarbon reserves in difficult and complex reservoirs can be calculated and gas and oil shale are being produced from unconventional sources, according to the minister. "In the UAE we are utilising the opportunities afforded to us by these new technologies to the utmost degree. There is no doubt that the days of easy discoveries are over and future exploration for oil could be difficult and costly. The optimal path forward is rooted in the employment of best international practices to improve enhanced oil recovery," he said. Affirming that "this is the opportune moment for investment in the hydrocarbon industry', he said some scenarios stipulate that world oil demand will increase to 105 million bpd by 2030. Other more optimistic scenarios stipulate the rise in demand to reach 112 million bpd. Nonetheless, as a consequence of the fact that many oil fields in the world have reached maturity many oil producing countries will not be in a position to significantly increase their production." Global economic and population growth results in continual increase in the demand for energy. Within this context I would like to draw attention to the economic growth evidenced within the emerging markets of Asia and South America leading to the rise in energy demands in the region. Based on this perspective, the government of the UAE has prioritised the energy sector in line with the following considerations: A- Cooperating with members of the organisation of Petroleum Exporting Countries (OPEC) to contribute to the balance and stability of world oil markets. B- Diversifying outsources of energy through investment in complimentary renewable sources, particularly increasing utilisation of solar and atomic energy. C- Employing cutting- edge technologies to discover and exploit hydrocarbons D- Protection of the environment and conservation of energy usage in the UAE. Based on the above highlighted themes, the Ministry of Energy is currently developing a comprehensive strategy at the national level, taking into consideration the continually increasing local demand in energy, the importance of diversification of energy sources, conservation of energy and protection of the environment. Nuclear energy is expected to account for 25% of power production within the UAE through the operation of four nuclear power plants which will generate 5.6 gig watts of electricity. The UAE has already embarked on generating electricity through its solar power plant Shams1 with a generation capacity of 100 MW. Shams1 is considered the largest of its kind in the region. Furthermore, the UAE is working on a strategy that will raise the percentage of energy from renewable sources. In addition to that, recent events have proven that focusing on the security of energy is necessary in order to address natural disasters and geopolitical tensions as well as other unanticipated situations which occur periodically in the world. In this regard the government of the UAE undertook to construct an oil pipeline connecting Habshan - Fujairah to guarantee crude oil supplied to world markets. The UAE is also hard at work to raise its crude oil production capacity to 3.5 million bpd in an effort to contribute to the stability of world oil markets as well as live up to our long-term commitments to consumers. In spite of the uncertainty facing the oil industry in general and demand for oil in particular, it is certain, according to the energy minister, that the era of oil is still flourishing and demand in the long-term is expected to increase. In addition, oil producing countries such as the UAE are continuing with their investments in production capacities to meet the steadily increasing demand. The Director General of Abu Dhabi National Oil Company (ADNOC), Abdulla Nasser Al Suwaidi, stressed on the importance of providing secure and stable oil and gas supplies with reasonable yet good prices for the company. Al Suwaidi, in remarks at the same conference, affirmed that ADNOC seeks to develop its discovery and production infrastructure, refined product industry and petrochemical industries. "ADNOC will reach its capacity target by 2017" and some of the new production will supply expanded units at ADNOC's refinery at Ruwais. ADNOC plans to double processing capacity at the 400,000 bpd plant by the end of 2014, he added at the Middle East Petroleum and Gas Conference. In 2012, new strategic agreements between the UAE and other countries gave new foreign oil companies access to the UAE oil industry. In January 17th in Abu Dhabi, a cooperation agreement and on energy between was signed between the UAE and China The strategic cooperation agreement was signed between Abu Dhabi National Oil Company (ADNOC) and China National Petroleum Corporation (CNPC). Dr. Joan Salem Al Dhahiri, Secretary General of the Supreme Petroleum Council (SPC), signed the agreement on behalf of the UAE, while Jiang Jiemin, President of the China National Petroleum Corporation (CNPC), signed it on behalf of China. The agreement aims at collaborating in production and upstream projects in one or more undeveloped areas as specified by the Supreme Petroleum Council. The Chinese company will conduct technical and economic studies in order to assess those areas and will forward the studies to ADNOC. The agreement also aims at cooperating in the fields of petrochemicals, technical services, engineering and construction services, equipment manufacturing and supplying, education and training, and research and development. In March 2011, the governments of Abu Dhabi and Korea entered into a wide-ranging Memorandum of Understanding (MoU) related to cooperation in the oil and gas sector. Additionally, the Abu Dhabi National Oil Company (ADNOC) and the Korean National Oil Company (KNOC) took a first step toward Korean Upstream participation in Abu Dhabi, by signing a separate Heads of Terms Agreement related to the further exploration and potential development of three undeveloped blocks held by ADNOC and believed to have more than 500 million barrels of oil in place. A third MoU related to future areas of economic cooperation in semiconductors, media, and investment and financial services was also signed then. On March 5th, 2012, Abu Dhabi National Oil Company (ADNOC) and Korea National Oil Corporation (KNOC) and GS Energy, have signed yesterday a joint venture agreement to develop three undeveloped oil fields in the Abu Dhabi Emirate. The agreement which was signed on the basis of sharing participation in ADNOC's concession provides for the joint operation and investment of the undeveloped oil fields. The agreement was signed by Abdulla Nasser Al Suwaidi, ADNOC Director General and for the Korean side by Young-won Kang President and CEO, Korea National Oil Corporation and Dong-soo Hur, Chairman and CEO, GS Caltex Corporation here at ADNOC Head Office, according to a press release by ADNOC. The ceremony was attended by Jauan Salem Al Dhaheri, Supreme Petroleum Council (SPC) Secretary General, Sukwoo Hong S. Korean Minster of Knowledge Economy and Seungjun Kwak Director General, Presidential Council for Future and Vision and Taekyun Kwon Ambassador of the Republic of S. Korea to UAE. According to the agreement ADNOC will retain a 60% participation in the project and the Korean consortium will have 40% participation (KNOC 34%, GS Energy 6%) The agreement involves development of three undeveloped oilfields secured based on the Head of Terms signed between the two parties in March, 2011. The fields contain two onshore fields and one offshore oilfield which are expected to start production within several years. The agreement which will be valid for 30 years provides for exploration, development and production activities for the oilfields with economic oil quantity initially in place. – Emirates News Agency, WAM