Abu Dhabi oil sector cuts operating costs

25 May 2015

Oil producers asked to reduce operational spending by 10-15 per cent on lower oil prices

  • Cost cutting will not affect job numbers
  • Adnoc continues to increase R&D spending
  • State oil group has no cap on research spending

The Abu Dhabi oil sector’s operating companies have been asked to cut operating expenditure (opex) by 10-15 per cent to help offset lower oil prices, according to a senior executive at Abu Dhabi National Oil Company (Adnoc).

While Adnoc is looking to cut operating costs, the measures will not affect job numbers or the company’s research and development (R&D) programme, said Yasser Saeed al-Mazrouei, Adnoc’s deputy director of exploration and production, speaking at Abu Dhabi International Research and Development Conference & Exhibition (Adrac) on 24 May.

Adnoc is aiming to increase its production capacity to 3.5 million barrels a day (b/d) by 2017 from a current capacity estimated at about 3 million b/d and said it is on track to meet the target despite the cost cutting.

Al-Mazrouei said that Adnoc’s investment in R&D would not be affected by the oil-price environment, despite the cost-cutting elsewhere in the company.

“We do not have a limit on R&D investment. We have never had a cap in the last ten years [since Adnoc started its R&D programme] and it was never dropped or returned,” he said.

“We are seeing an increase in the number of people going abroad for higher education and secondment to oil companies… we are continuing to go out and get partnerships,” he added.

Adnoc could not give exact figures for the amount spent on R&D each year, saying it was difficult to track total spending throughout different arms of the business.

“Long-term issues are not affected by short-term fluctuations… it is proportionally growing,” said Ahmed al-Hendi, senior vice president of subsurface technology at Abu Dhabi Marine Operating Company (Adma-Opco).

Adma-Opco is one of the main companies leading the capacity expansion in Abu Dhabi with the development of several new offshore fields.

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