Adco to invest $5.3bn for capacity expansion in 2012

The UAE's largest oil producing firm said yesterday it would pump nearly $5.3 billion (Dh19.5bn) into projects in 2012 to increase its sustainable crude output capacity by around 225,000 barrels per day (bpd).

The investments by the Abu Dhabi Company for Onshore Oil Operations (Adco) are part of an ambitious two-phase expansion programme that will lift its capacity by around 400,000 to 1.8 million bpd in 2017.

The plan will focus on minor onshore oilfields and undeveloped deep field deposits and it will be fully carried out regardless of the oil price movements, Adco General Manager Abdul Monem Al Kindi told reporters at the opening of a three-day conference on exploitation of minor oilfields.

Kindi said the projects are part of an overall oil capacity expansion plan to increase the UAE's total sustainable crude output capacity to nearly 3.5 million bpd.

He declined to specify the country's present capacity but industry sources estimated it at nearly 2.8 million bpd at the end of 2009.

Kindi said the increase has been prompted by what he described as a steady growth in global oil demand, adding that consumption is projected to surge to about 120 million bpd after 20 years from nearly 87 million bpd at present.

"We have drawn up a strategy to increase our sustainable oil production capacity by 400,000 in 2017. We do not take into consideration the oil price level and other market developments because our strategies are usually long term and do not take market developments and other external factors into account," he said.

"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 $3.5bn. The first stage will focus on difficult field layers and two new contracts, including Bab field, will be awarded shortly."

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's Exploration and Production Manager Khaled Sahouh said the first phase of the expansion plan would add nearly 225,000 bpd to the company's sustainable capacity while the rest would be completed in 2017.

He said the plan covers all Adco's fields but the focus would be on what he described as "marginal fields and undeveloped deposits."

"It is time that we developed our small and marginal fields, which have not been developed properly. We cannot keep our eyes closed on those fields. We want to fully exploit our national resources and this should prompt us to develop small and undeveloped hydrocarbon deposits alongside major fields," Sahouh told Emirates Business after the press briefing.

"The present expansion programme gives emphasis on these marginal fields and a large part of the increase will come from these fields. The only problem is that these fields are difficult and their production begins to decline just after 10 or 15 years. This means we need huge investments to keep them running."

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 Mananger 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.

"Adma-Opco is currently able to produce 600,000 bpd," said Al Jarwan.


Progress plan

- Phase I: Total production of around 213,000 bpd expected by 2012 from the following fields – Bab, Asab, Shah, Qusahwira (South East) , NEB (Al Dabb'iya and Rumaitha/Shanayel), Bida Al Qemzan.

- Phase II: By 2017, about 70,000 bpd will be coming from Bab and Asab NEB, while 142,000 bpd will coming from Bab Qusahwira (South East) NEB Mender (South East) 

- Marginal Fields: The marginal fields can contribute up to 250,000 and will be utilised as part of shorter and longer term to sustain the 1.8 million bpd capacity, in addition to enhance oil recovery from existing fields.

- Clarifications for Marginal Fields: Unit Technical Cost (UTC) for marginal fields of producing one barrel of oil is above $10 per barrel.

The Marginal fields group is composed of more than seven fields and more than 20 reservoirs.

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