The upstream oil sector looks set to take a back seat over the next five years. Abu Dhabi, the federation's largest producer at 1.9 million b/d, already has more than 500,000 b/d of spare capacity, and is focussing on gas reserves and expanding its downstream refining and petrochemical capacity.

The UAE's wellhead output has remained virtually unchanged over the past 12 months, with production ranging between 2.16 million b/d and 2.2 million b/d. Abu Dhabi's six-year programme to expand sustainable capacity is also nearing an end. The last major construction contract in the programme was awarded in May to Italy's Snamprogetti for the development of the Sahil field, operated by Abu Dhabi Company for Onshore Oil Operations (Adco).

Some smaller schemes are planned, including a pilot gas injection project for Zakum Development Company. However, they will inevitably be eclipsed by developments in the gas and refining sectors, where Abu Dhabi National Oil Company (ADNOC) plans to spend an estimated $1,000 million annually over the next five years.

Almost $2,000 million is earmarked for the Ruwais refinery expansion, for which the first phase construction tender is due in July or August. A further $850 million will go into establishing the UAE's first petrochemical plant, a 450,000 tonne a year (t/y) polyethylene facility to be built by ADNOC in joint venture with Scandinavia's Borealis.

Three major gas development projects are also planned. The most advanced is the $500 million-plus Asab gas development project.

Two schemes, targeted specifically at meeting rising gas demand from local industry and power installations, are under study - phase two of the onshore gas development programme and the offshore Khuff development project (MEED 17:2:96, Cover Story).

The Khuff scheme has been drawn up with the aim of supplying gas to neighbouring Dubai, which must balance a shortfall of some 500 million cubic feet a day (mcf/d) by the turn of the century. However, Abu Dhabi is facing some serious competition. Amoco Sharjah Oil Company, a subsidiary of the US' Amoco Corporation, is proposing a 500-kilometre gas pipeline from Oman. It will be linked into the existing Shaxjah gas network, from where it will supply Dubai and the northern emirates. The final option for Dubai involves taking gas from Qatar. Negotiations were held in early 1996 between the government and an Arco-led consortium backing the scheme, which entails the construction of a sub-sea pipeline.

Outside oil and gas-rich Abu Dhabi, private investors are at the forefront of developments. In January, a new venture, known as Ras al-Khaimah Oil & Gas Company and backed by US investor Michael Dingman, signed an exploration and development agreement for onshore and offshore. In Sharjah, FAL Petroleum Company expects to have 20,000 b/d throughput by late 1997 at its refinery, purchased second hand from Canada. In Jebel Ali, Emirates Industrial Bank has teamed up with local investors to build an 18,000 b/d unleaded petrol production facility, while in Fujairah, Van Ommeren of the Netherlands is heading a new venture, promoting the construction of a $75 million tank terminal.