Crisis a boon for Abu Dhabi energy projects

The global financial turbulence has prompted Abu Dhabi to intensify an investment drive to expand its energy sector and new major contracts will be awarded soon, the operator of the emirate's hydrocarbon sector said yesterday.

The Abu Dhabi National Oil Company (Adnoc) said the crisis had forced many companies in oil producing and consuming countries to cut spending while slackening crude demand will hamper expansion projects.

"But at Adnoc and its group of companies, we are looking at the positive side of the crisis, which has created a window of opportunity for us to push ahead with major ventures at lower costs and better quality," Adnoc's CEO, Yousuf bin Omair, told the Gastech conference, which was opened yesterday by General Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces.

"As a result, Adnoc quickly embarked on the implementation of its projects, which cover expansion of its oil output capacity and increasing gas production. Four large contracts have been awarded for the development of the Shah field, one of the largest gas ventures in the region."

Omair said another contract would soon be awarded for a project to link onshore and offshore gas fields with a capacity of one billion cubic feet per day. He did not give details of the project but Abu Dhabi has been locked in a drive to develop both onshore and offshore oil and gas fields as well as setting up a network to link gas facilities in both areas.

In recent statement, an Adnoc official said the sharp decline in construction expenses because of the global economic crisis is expected to slash the costs of the Shah sour gas project by more than 30 per cent. Ismail Al Rumhi, Director of the Gas Treatment Section at Adnoc, said the Shah project would be among several bids to be invited by Abu Dhabi in the next two years, adding their cost would be billions of dollars. The project is a joint venture between Adnoc and the US ConocoPhilips, which said recently that negotiations were still under way to implement the project. ConocoPhilips said in November that a final investment decision on the development would be delayed until the Feed was completed.

The US-based Fluor Corporation is working on the Feed for Abu Dhabi Gas Industries (Gasco), the Adnoc subsidiary that is managing the scheme. WorleyParsons is the project manager. The main objective of the project is to develop onshore sour gas reservoirs at Shah and to establish grass root gas processing facilities.

Omair said another key project to be carried out would be a hydrocracker unit that would produce nitrogen, which will replace methane in well injection.

"This will result in a large increase in methane supplies to the Abu Dhabi gas network and support the Abu Dhabi Vision 2030," he said.

Official figures showed such investments would nearly triple the emirate's gas output of about three billion cubic feet within five years.

Condensates output alone will rise from 85 million barrels to110 million barrels a year while LPG and naphtha will increase from seven million tonnes to 12 million tonnes a year. Sulphur production will also double to 40 million tonnes a year.

In remarks published by the Gastech bulletin, Energy Ministry Mohammed bin Dhaen Al Hameli said the global crisis would not affect the implementation of major oil and gas projects in the country. More than 400 companies from 32 countries are participating in Gastech.

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