Abu Dhabi’s Zakum Development Company (Zadco) is spending almost $500m to develop the Satah offshore field. It is also tendering contracts that will increase production of the Upper Zakum field to 750,000 barrels a day (b/d).

The Abu Dhabi National Oil Company (Adnoc) subsidiary is growing its capacity as part of the emirate’s ambitious target to raise offshore output from 1.1 million b/d in 2010 to 1.75 million b/d by 2020. Together with Adnoc’s Abu Dhabi Marine Operating Company (Adma-Opco), Zadco will be spending about $25bn to meet this target.

It will not be an easy task. As with Satah, marginal fields will have to be developed, and cost-intensive enhanced oil recovery methods will need to be used to ramp up production to economic levels. Consequently, while receipts may increase, profit margins will decline with increased production costs.

Technically challenging production also calls for access to the most modern technology on the market. Observers point to the opportunities this gives international oil field services companies, and the involvement of France’s Technip in Satah is a case in point.

The ownership structure of Adnoc’s subsidiaries could also be seen as helpful; 40 per cent of both Zadco and Adma is owned by international oil companies (IOCs). Yet this might be deceiving. With IOCs having to share concessions with each other, they will be hesitant to make use of their latest technologies for fear of exposing it to their competitors.

The concessions of Adma’s foreign stakeholders expire in 2018. Some critics are championing a different model, with IOCs working alone on allotted fields. Changes in 2018 are too late to affect the bulk of production increases before 2020. Adnoc will hope the old model is sufficient to support its drive.

Zadco awards Satah full field development contract