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Abu Dhabi oil boost gathers momentum

Projects aimed at delivering ambitious production growth are gathering pace

Abu Dhabi National Oil Company (Adnoc) has a target to increase output by almost 15pc from 3.5mn bl/d in late 2018—when it outlined its new strategy—to 4mn bl/d by the end of 2020, and to 5mn bl/d by 2030. A number of projects that form part of a $132bn five-year investment plan to help achieve them are beginning to motor ahead. 

And the firm is seeing progress not just in development and production, but also in exploration. In November last year, the country’s Supreme Petroleum Council (SPC) unveiled a rare revision to the UAE’s reserves figures—revealing that recent discoveries in Abu Dhabi totalling some 7bn bl had increased the federation-wide tally to 105bn bl, thereby leapfrogging Kuwait to assume sixth place in the global endowment rankings.  

More than a tenth of the increment came from the relatively new and hitherto obscure Haliba field in the onshore south-east, where formal commissioning by Indian contractor Larsen & Toubro of the 40,000bl/d first production phase last July was accompanied by an announcement that estimated reserves at the field had increased more than five-fold  to 1.1bn bl. The asset forms part of a 3,400km² concession awarded in 2014 to the newly-formed Al Dhafra Petroleum—a joint venture between Adnoc and a South Korean team of Korea National Oil Company (Knoc) and GS Energy. 

The 30-year deal marked Seoul’s entry into Abu Dhabi’s upstream sector, cemented the following year by GS’ acquisition of a 3pc stake in the flagship Adnoc Onshore concession comprising the emirate’s main onshore fields. The partners spoke at the phase one inauguration event of plans to accelerate incremental development and, on 20 January, Canada’s SNC-Lavalin announced award of the Feed package for the second phase—described as intended “to develop surface facilities in an optimised manner to handle long-term production as well as future production prospects near Haliba”, the latter presumed a reference to three freshly-discovered fields, named Al Humrah, Bu Tasah and Bu Nikhelah, revealed in July 2019. Envisaged production was not revealed but the contribution to Adnoc’s 2030 target will be relatively modest. 

Upper Zakum 

On an entirely different scale, and also at the design stage, is an estimated $8bn project to raise production at Upper Zakum—at 50bn bl the world’s second-largest offshore field after Saudi Arabia’s Safaniya—by 250,000bl/d to hit the symbolic 1mn bl/d mark by 2024. The asset is operated under a concession held by Adnoc alongside ExxonMobil and Japan’s Inpex. The US major entered the consortium in 2006 with a remit to lead in boosting production from 500,000bl/d to 750,000bl/d through building artificial islands for the requisite drilling rigs and processing facilities, designed to reduce drilling costs and lessen environmental damage.

Adnoc is seeing progress not just in development and production, but also in exploration

 The so-called UZ750 project is scheduled for completion this year by an engineering, procurement and construction (EPC) contracting team of the UK’s Petrofac and South Korea’s Daewoo (South Korea). The UZ1000 expansion was formally launched last May—the month after Spain’s Tecnicas Reunidas picked up the Feed assignment. Contracting activity is now gathering speed: prequalification applications were submitted in the fourth quarter for the main EPC packages, with a tender expected by end-June, while bids for the project management consultancy contract were due in December. The UK’s Wood Group is a natural favourite by dint of having performed the role on the previous project.

A reorganisation of the concessions covering the remainder of Abu Dhabi’s main offshore oilfields in early 2018 triggered several other development projects—including one at the smaller Lower Zakum field. A Feed award is expected by the end of the first quarter covering the first phase of a long-term development plan aimed—in common with a similar project under way at Umm Shaif, another prolific but ageing offshore stalwart—primarily at prolonging the production life rather than delivering major short-term output hikes.

Phase one is designed to maintain current output of around 450,000bl/d until 2027 while phase two provisionally envisages increasing production to 500,000bl/d for the remainder of the decade. Inpex was picked as asset leader from among the concession’s foreign shareholders—the first time such a role has been allocated beyond the majors and a sign of the Japanese firm’s coming of age within the Abu Dhabi upstream sector.

Source: Petroleum Economist
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