Abu Dhabi oil investment down for first time

Abu Dhabi’s investments in its massive hydrocarbon sector slumped by more than 12 per cent during 2009 for the first time after a steady increase over the past three decades, according to official data.

The government, pursuing a drive to expand output and maintain its present sustainable capacity, pumped around Dh9.269 billion in to the oil and gas industry last year, down by about 12.3 per cent from the Dh10.564 billion channeled into the sector during 2008, showed the figures by the Abu Dhabi Statistics Centre, the emirate official data provider.

The figures were contained in the Centre’s annual report about the emirate’s gross fixed capital formation and its contribution to the domestic economy.

A breakdown showed gross capital formation recorded growth in all other sectors, with total investments in the economy climbing to a record Dh79.84 billion last year from around Dh72.67 billion in 2008.

The decline in gross capital formation in the hydrocarbon sector followed many years of a steady increase as Abu Dhabi has been locked in a drive to expand its crude production capacity, develop its gas sector and set up related projects.

Investments in this sector leaped by nearly 24.7 per cent in 2008 as oil prices soared to an all time high of $147 a barrel in late July that year and global demand was at its peak before both prices and demand collapsed after the eruption of the global financial crisis in September 2008.

Growth in such investments stood at eight per cent in 2007 and around 5.3 per cent in 2006.

The investments in the hydrocarbon sector last year accounted for nearly 11.5 per cent of the total gross capital formation of around Dh79.8 billion, which was higher by about 10 per cent over the 2008 investments of Dh72.6 billion.

Abu Dhabi is the main oil producer in the UAE, which aims to boost its crude output capacity above three million barrels per day in the next few years.

Official figures showed Abu Dhabi alone is pumping nearly Dh30 billion during 2005-2011 into oil projects, which target both its onshore and offshore areas, mainly the super-giant Upper Zakum and other major fields.

Around $1.5 billion (Dh5.5 billion) would be spent on the development of the offshore Upper Zakum to add 200,000 bpd to its 550,000 bpd capacity.

An equivalent sum has also been allocated for the expansion of the mammoth Umm Shaif offshore field and $2 billion for the Nasr Field development by the Abu Dhabi Marine Oil Company (ADMA-OPCO).

The Abu Dhabi Onshore Oil Company (ADCO), one of the largest 10 oil companies in the world, is pumping nearly Dh5.5 billion into its Phase 1 Development Programme, which will add about 400,000 bpd to its output.

The projects are part of an ongoing programme by the OPEC member UAE to expand its sustainable crude oil capacity, which official sources estimated at nearly 2.8 million bpd at the end of 2009.

While such projects will boost capacity to well above three million bpd in four years, there are plans to push ahead with expansions to reach 3.5 million bpd in the long term to tap the country’s massive hydrocarbon reserves of nearly 98.7 billion barrels, more than eight per cent of the world’s total proven oil wealth.

Oil industry sources believe the decline in gross capital formation in 2009 was a result of lower crude prices and a slowdown in global demand.

In 2009, the UAE’s average oil output was around 2.3 million bpd, leaving an idle capacity of more than 400,000 bpd.

The output was far below the 2008 production of around 2.6 million bpd and was a result of a collective OPEC agreement to trim supplies to prop up prices.

Follow Emirates 24|7 on Google News.