With oil prices dropping by more than 60 per cent since their $147 peak in July, Gulf oil and gas producers are putting the brakes on some investments.
But for the UAE, gas may be an exception. Despite having the world’s sixth-largest gas reserves, the UAE is facing a shortfall, as demand for electricity rapidly increases.
To its credit, Abu Dhabi, which holds the majority of the country’s gas, has started fast-tracking plans for the development of its gas reserves.
With the balance of supply and demand becoming critical, Abu Dhabi has grasped the urgency of the situation.
However, much of its gas deposits are high in sulphur, making extraction difficult and expensive, even for experienced international oil companies.
Despite this, Abu Dhabi National Oil Company (Adnoc) is investing billions of dollars in a series of megaprojects to increase its gas production capacity.
The US’ ConocoPhillips has been contracted by Adnoc to produce up to 1 billion cubic-feet-a-day (cf/d) of sour gas from the onshore Shah field.
However, contractors are already wary of the dangers surrounding the central sulphur pipeline, and Abu Dhabi could be forced to reconsider the scope of its masterplan.
Abu Dhabi is also planning to develop the Bab and Hail sour gas fields, which will also require international involvement, and oil majors expect another bid round for the development of deep offshore gas reserves.
The emirate needs to maintain a realistic approach regarding the speed at which it is trying to develop its projects, especially given the economic climate and the need for oil majors’ investment.
Given the complicated nature of its deposits, Abu Dhabi is unlikely to be able to harness its reserves as quickly as it would like.