Abu Dhabi is pushing ahead with projects to lift its oil production capacity by nearly one million barrels per day, taking advantage of declining construction costs and recovering global crude demand, an official has said.

The emirate’s three main oil producing firms are investing heavily in such projects which will expand its sustainable oil output capacity from around 2.5 million bpd at present to 3.5 million bpd in 2016, said Abdul Monem Al Kindi, general manager of the Abu Dhabi Company for Onshore Oil Operations (Adco), the largest oil producing firm in the UAE.

Addressing local reports late Thursday, Kindi said Adco had already awarded oil ventures worth around $5 billion this year as part of its ongoing expansion programme that will lift its own capacity by about 400,000 bpd.

He said Adco and its partners in the emirate’s oil sector had been encouraged by recovering demand and a decline of around 30 per cent in construction costs after they surged to one of their highest levels just before the 2008 global crisis.

“All these projects will increase Abu Dhabi’s total oil output capacity to around 3.5 million bpd in 2016 from 2.5 million bpd currently,” he said.

He said Adco’s investments, which could reach $5.3 billion, would boost its sustainable production capacity to around 1.8 million bpd within the next five years to maintain its position as one of the largest oil firms in the world.

“The investments required for such projects are large..…I can’t give figures for the whole programme but the investments for the first phase which ends in 2012 are estimated at around $3.5 billion…the first stage will focus on difficult field layers and two new contracts, including Bab field.”

Kindi said the projects are part of an ongoing strategy ordered by the Supreme Petroleum Council (SPC), Abu Dhabi’s top oil decision-making body, to expand the emirate’s hydrocarbon output capacity and develop its reserves. He said this would allow the UAE to maintain its position as one of the world’s top oil producers and to remain among the largest five oil and gas powers.

“In fact, our present output capacity is much more than 1.4 million bpd but we are talking about sustainable production…our current development plan will focus on increase sustainable output and at the same time maintaining present capacity.”

Adco, which controls Abu Dhabi’s onshore oil activities, is one of the largest oil producing companies in the world, with its proven crude reserves exceeding 20 billion barrels.

The company, which is 60 per cent controlled by Adnoc and 40 per cent by foreign partners, has been locked in a massive development programme to increase sustainable output and maintain capacity.

Spread over 1,200 square kilometers, more than area of Bahrain, Bab field is one of the world’s largest onshore hydrocarbon reservoirs, with more than 10 oil and gas bearing zones. It is located around 85 kilometres southwest of Abu Dhabi.

The two other major oil producing firms in the Emirate are the Abu Dhabi Marine Operations Company (Adma-Opco) and Zadco, which operates Zakum field, one of the largest offshore oil fields in the world.

In recent comments, Adma-Opco general manager Ali Al Jarwan put production at about 600,000 bpd in mid 2009. He said expansion projects under way would boost the company’s output capacity by nearly 50 per cent.

In recent comments, another Abu Dhabi energy official estimated total oil and gas projects in the emirate at nearly $30 billion during 2009-2013.

“This expansion programme involves investment of nearly $30 billion, perhaps more,” said Abdul Aziz Al Ameri, Deputy CEO for large projects at the government-controlled Abu Dhabi Gas Company (Gasco).

“The programme includes the expansion of the emirate’s oil and gas industry as well as the construction of more petrochemical projects…there are nearly 37 projects involved in this programme, which will be completed at the end of 2014…many local and international companies are participating in these projects on a contractual of joint venture basis.”

The UAE’s oil reserves are estimated at around 98 billion barrels, the world’s fifth largest after those in Saudi Arabia, Iran, Iraq and Kuwait.

It also has the world’s fifth largest gas resources after Russia, Iran, Qatar and Saudi Arabia, standing at around 6.5 trillion cubic metres.

Figures by the Ministry of Economy showed gross capital formation (investment) in the UAE energy sector has exceeded Dh40 billion over the past five years.