ABU DHABI: Abu Dhabi’s push to diversify its oil and gas sector has resulted in a heavier focus on non-conventional hydrocarbons and downstream capacity, as well as increased participation from global partners that is likely to continue, according to a report.
“The emirate has made important strides towards securing its growth plans amid global and regional risks, and ensuring wealth for future generations,” the report by think tank Oxford Business Group (OBG) said, report agencies.OBG’s Abu Dhabi 2019 report noted that following decades of steady growth and development, the emirate’s oil and gas sector is “undertaking a shift”.
Although the industry is profitable – especially with oil prices averaging $70 per barrel over the first 10 months of 2018 – Abu Dhabi’s most accessible reserves are “starting to decline after decades of extraction, and the sector’s attention is now beginning to shift towards more technically difficult operations”, the report said.
These include newly explored fields, brownfield development (extending the lifespan of mature fields through cost-effective technologies), and enhanced oil recovery.
“These activities may be more capital-intensive, but they are commercially viable thanks to higher and more stable oil prices,” OBG’s report said. “What is more, Abu Dhabi is prepared to make substantial investments to increase its oil and gas production, with a view to supplying expanding downstream activities, which are designed to increase the value obtained from each barrel extracted.”
To do this, state oil producer Adnoc (Abu Dhabi National Oil Company) is reorganising internally and restructuring its activities to ensure they are more commercially driven and competitive, the report noted. Forming new partnerships with global industry partners is a key strand of this.
Last October, US-based Baker Hughes, the world’s second-largest oil services company, announced it would take a 5 per cent stake in Adnoc’s drilling unit for $550 million under a joint venture between the two.