Drivers

Offshore developments are playing a key role in Abu Dhabi’s efforts to increase its crude production capacity to 3.5 million barrels a day (b/d) from today’s estimated 2.6 million b/d.

Major offshore developments over the coming years will be driven by the emirate’s target of increasing oil export revenues and producing more gas to fuel rising demand from expanding industries and an increasing population. To achieve the latter, Abu Dhabi is integrating its offshore fields with its onshore gas processing and distribution network at Ruwais. In recent years, the UAE has leased smaller marginal fields to international companies for exploration.

Operating companies

Two oil and gas joint ventures, both affiliates of Abu Dhabi National Oil Company (Adnoc), carry out the vast majority of the UAE’s offshore production. Abu Dhabi Marine Operating Company (Adma-Opco) – a joint venture of Adnoc (60 per cent), UK-based BP (14.67 per cent), France’s Total (13.33 per cent) and Japanese Oil Development Company (Jodco, 12 per cent) – was formed in 1977 to operate the Lower Zakum and Umm Shaif fields. It is currently developing the Nasr, Satah al-Razboot (Sarb) and Umm al-Lulu fields.

UAE operating companies
Operating company Ownership
Abu Dhabi Marine Operating Company (Adma-Opco) Adnoc 60%, BP 14.67%, Total 13.33%, Japanese Oil Development Company (Jodco) 12%
Zakum Development Company (Zadco) Adnoc 60%, ExxonMobil 28%, Jodco 12%
Abu Dhabi Gas Industries (Gasco) Adnoc 68%, Shell 15%, Total 15%, Partex Oil and Gas 2%
Abu Dhabi Gas Development Company (Al-Hosn Gas) Adnoc 60%, Occidental Petroleum 40%
Abu Dhabi Oil Company (Adoc) Cosmo Oil 63%, Japan Energy Development Company 31.5%, Tokyo Electric Power Company, Chubu Electric Power Company, Kansai Electric Power Company (1.8% each)
Bunduq Oil Producing Company  United Petroleum Development Company 97%, BP 3%
Total Abu al-Bukhoosh Company Total 75%, Inpex 25%
KNOC JV Adnoc 60%, Korea National Oil Company (KNOC) 34%, GS Energy 6%
Dubai Petroleum Establishment Dubai government
Crescent Petroleum (Sharjah) Crescent Group
JV=Joint venture. Source: MEED Projects

Zakum Development Company (Zadco) – a joint venture between Adnoc (60 per cent), US-based ExxonMobil (28 per cent) and Jodco (12 per cent) – operates the large Upper Zakum and the smaller Umm al-Dalkh and Satah fields. It is expanding Upper Zakum’s capacity with a significant investment programme.

Current operations

Most of Abu Dhabi’s offshore oil is produced at Adma-Opco’s Umm Shaif and Lower Zakum fields and Zadco’s Upper Zakum field. Smaller operations include Abu Dhabi Oil Company (Adoc), a joint venture with several Japanese companies. At about 1.1 million b/d, offshore production in Abu Dhabi represents about 42 per cent of the emirate’s total crude production of 2.6 million b/d.

The largest investment in Abu Dhabi’s offshore oil and gas sector is in the upgrade of the Upper Zakum field’s capacity

The emirates of Dubai and Sharjah produce smaller amounts from offshore fields. Dubai Petroleum Establishment, which has decreased production significantly since its peak in the early 1990s, has a capacity of 50,000-70,000 b/d, while Sharjah’s Crescent Petroleum can produce about 60,000 b/d.

Planned investment

The largest investment in Abu Dhabi’s offshore oil and gas sector is in Zadco’s expansion of the Upper Zakum field’s capacity to 750,000 b/d from the current level of 500,000 b/d. The megaproject will be developed in three stages. An estimated $4bn contract for engineering, procurement and construction (EPC) on early production facilities is expected to be awarded by the end of 2012, while an $800m deal was awarded in July to a consortium of France’s Technip and UAE-based National Petroleum Construction Company.

Adma-Opco plans to add 300,000 b/d of new offshore oil capacity by developing several fields, including 100,000 b/d from both Sarb and Umm al-Lulu and 60,000 b/d from Nasr. Total investment is expected to be $3bn on Nasr, $1.7bn on Sarb and $1.5bn on Umm al-Lulu.

A joint venture of Adnoc and Korea National Oil Company is planning to bring 35,000 b/d of new capacity in the next two years, which will require significant investment in two onshore fields and one offshore development.

Challenges

The new offshore developments in Abu Dhabi are groundbreaking for their use of artificial islands that will house drilling platforms and production facilities. Construction on these islands represents the bulk of the work on the Upper Zakum field development. In late 2011, it was reported that slow progress in the construction of these islands was delaying the bidding process, but Zadco has now started to award major deals for the early production facilities.

Artificial islands will also be built by Adma-Opco in its field developments to support drilling, production, processing and distribution facilities. The two firms must also expand the facilities, including accommodation and utilities, at their processing hubs on Das Island (Adma-Opco) and Zirku Island (Zadco).

Key stakeholders

  • Oil Minister: Mohammed bin Dhaen al-Hamli
  • Chairman of Supreme Petroleum Council (Abu Dhabi):  Sheikh Khalifa bin Zayed bin Sultan al-Nahyan
  • Abu Dhabi National Oil Company (Adnoc) chief executive officer (CEO): Abdulla Nasser al-Suwaidi
  • Abu Dhabi Marine Operating Company (Adma-Opco) CEO: Ali Rashid al-Jarwan
  • Zakum Development Company (Zadco) CEO: Saif al-Suwaidi
  • Value of projects planned or under way: $17.5bn
  • Main area of activity: Gulf

Source: MEED