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Oil - National day 2001

posted on 30/11/2001: 1945 views

Oil and gas have been the major component of the development of the United Arab Emirates since the federation was established in 1971. While the federation provided the political will for the building of a modern country and society, the wealth from oil and gas production has been wisely used oil and gas wealth was wisely used economically to build the country's international-standard infrastructure, capable of establishing and sustaining a strong economy.

Each year since the federation was established there has been growth in the oil and gas sector, which, in turn, has reflected positively on the progress of the UAE, thanks to the efforts of the country's leadership, headed by President H.H. Sheikh Zayed bin Sultan Al Nahyan, and the continuous follow up of H.H. Sheikh Khalifa bin Zayed Al Nahyan, Abu Dhabi Crown Prince and Deputy Supreme Commander of the UAE Armed Forces, who is also the Chairman of the Abu Dhabi Supreme Petroleum Council.

Sitting on nearly 10 per cent of the world's proven oil reserves and four per cent of the world's gas reserves, the United Arab Emirates, UAE, will continue to play a major role in the stability of the world oil market throughout the current century. On February 15, 1950, nearly 52 years ago, the country's first exploration well was spudded on the coast north-east of Abu Dhabi at the site of 'Ras Sadr-1'. The well proved to be a dry hole. Oil was first exported from the offshore Umm Shaif field in 1962, followed by the export of crude from the onshore Bab field the next year.

In line with the instructions of President H.H. Sheikh Zayed bin Sultan Al Nahyan, the oil and revenues has been used to create a strong industrial sector to reduce dependency on an ever fluctuating oil income.

The directives of the UAE's leadership, under the guidance of President Sheikh Zayed, have always emphasised the necessity of wisely exploiting the country's natural resources for the betterment of the nation and to work together with other producers in order to achieve a stable international market, according to Minister of Petroleum and Mineral Resources Obeid bin Saif Al Nassiri.

Today, the UAE has the third largest recoverable oil reserves in the world, around 100 billion barrels, and is also fourth in the world in its proven natural gas reserves of 6.2 trillion standard cubic metres, compared to the 626 billion cubic metres in the seventies. Installed production capacity is over 2.5 million barrels of oil a day, although, as a staunch supporter of OPEC decisions, production has been set at around two million barrels per day in line with the OPEC March 23,1999 agreement.

The annual natural gas gross production stands currently at 38.9 billion cubic metres. At the current production level the UAE's oil reserves will last well into the next century. The country's production capacity will rise to 3.6 mbpd in 2005 and four mbpd in the year 2010. Abu Dhabi became the ninth full member of OPEC at the 14th meeting in Vienna in 1967, its membership later being transferred to the UAE, while the country is also an active member of the 10-nation Organisation of Arab Petroleum Exporting Countries, OAPEC.

The UAE exports 62 per cent of its crude oil to Japan, making it the UAE's largest customer, while gas exports are almost entirely to Japan. Overall, the UAE supplies almost one-eighth of Japan's entire gas requirements. Players in the global oil industry have been attracted to the UAE by the scope for investment and a number of multi-billion dollar projects are being carried out or are being planned.

Abu Dhabi controls over 90 of the country's oil and more than 85 per cent of gas reserves. The proven crude oil reserves of the emirate are 92.2 billion barrels, while those of natural gas are 188.4 trillion cubic feet. Principal offshore oil fields are Umm Shaif, Lower Zakum, Upper Zakum, Al Bunduq and Abu al Bukhoosh and the main onshore fields are Asab, Bab, Bu Hasa, Sahil and Shah. The smaller onshore Dabbiya and Rumaitha fields are also being expanded. Almost 92 per cent of the country's gas reserves are also located in Abu Dhabi and the Khuff reservoir, beneath oil fields in Umm Shaif and Abu al Bukhoosh, ranks among the largest single gas reservoirs in the world. Oil companies from Japan, France, Britain and the United States, Holland and other countries own up to 40 per cent of the energy sector in Abu Dhabi. Abu Dhabi was the first country in the Middle East to set up a plant of Liquified Natrural Gas (LNG) in 1973 which started exporting to Japan in 1977.

Abu Dhabi Gas Liquefaction Company, ADGAS, exports most of its LNG produced from Das Island to the Tokyo Electric Power Company, TEPCO, in Japan, under long-term supply contracts. The latest contract was signed in 1994 and expires in 2019. The creation of the Abu Dhabi National Oil Company, ADNOC, in 1971 marked an important milestone in development of oil industry as it controls the emirate's energy sector.

Abu Dhabis Supreme Petroleum Council, SPC, was formed in 1988 under the chairmanship of H.H Sheikh Khalifa bin Zayed Al Nahyan, Abu Dhabi Crown Prince, to determine Abu Dhabi's oil and gas policy and to oversee its oil and gas operations and related industry. Abu Dhabi is now entering into a new stage of development of onshore and offshore gas oilfields as part of a strategic plan to increase production in order to honour foreign commitments and meet growing local demand. Among major future gas projects is an agreement with Dubai to supply gas through a pipeline, part of the Dolphin project, created under the UAE Offsets programme.

The Dolphin project was launched in March 1999 following an announcement by the UAE and Qatar of a plan for a joint venture aimed at transporting gas from Qatar's huge reserves to industrial consumers in the UAE, Oman and other countries. Sheikh Khalifa in June 1999 issued laws establishing Abu Dhabi Oil Refining Company (Takreer), the Abu Dhabi Gas Company (Atheer) and the Polyethylene Products Plant in Ruwais, aimed at enabling the emirate to make full use of its huge oil reserves.

The Abu Dhabi Government-owned International Petroleum Investment Company, IPIC, concentrates on overseas investment in oil and oil-related activities and acquisition. IPIC has shareholding in many international companies like Compania Espanola De Petroles S.A (CEPSA), OMV of Austria and Pak-Arab Refinery Ltd., PARCO, of Pakistan. It also acquired a 50 per cent stake in South Korea's Hyundai Oil Refinery Company Ltd. Dubai, holds the second place in terms of oil reserves.

The Dubai Petroleum Company, DPC, is the main operator in the emirate, where oil was first found in 1966 in the offshore Fateh field. Dubai has a two per cent share of the UAE's gas reserves, both offshore and at the onshore Margham gas and condensate field. Sharjah has five per cent of the country's gas reserves, mostly non-associated gas which is being utilised domestically. The emirate's most important gas deposits are at the offshore Mubarak field and the onshore Saja'a. The offshore Mubarak field, operated by the local Crescent Petroleum Company, produces around 30,000 bpd of condensate.

In July 1999 Crescent Petroleum began drilling Sharjah-2 some 30 kilometres offshore of Sharjah, where gas has already been discovered. Crescent Petroleum Company along with London-based Atlantis, announced in July that they are planning to begin major seismic work in the gas-proven areas of Sharjah's interior desert. The onshore Saja'a and Moveyeid fields produce 35,000 bpd of condensate, in addition to natural gas.

The Sharjah Liquefied Gas Company, Shalco, was formed to increase exports of liquefied natural gas. In October 1999, the emirate's Ruler H.H. Dr. Sheikh Sultan bin Mohammed Al Qasimi, issued a decree on the creation of the Sharjah Petroleum Council.

In 1997, Ras al-Khaimah awarded Atlantis and Petroleum Geo Services a permit to explore the offshore Baih field. The Ras al Khaimah Oil and Gas Company, set up in 1996, has exclusive rights to the rest of the emirate and it began drilling offshore in December 1997. As part of its efforts to diversify source of income from crude exports, the country is developing downstream industries such as refineries and petrochemical plant.

The country has six refineries operating at present and plans are under way to construct new refineries and to increase the capacity of the existing ones in order to attain production of 180,000 bpd by the year 2000. Abu Dhabi is presently carrying out a five-year development project (1997-2002) aimed at boosting refining capacity. ADNOC's US dollars 600 million Ruwais refinery upgrading project is just one of them. Other major investments in the petrochemicals sector include four petrochemical plants set up in recent years at a total cost of Dh 10.6 billion. Among them is the Dh. 3.67 billion Borouge joint venture, Dh 1.83 billion Ruwais EDC plant, Dh 1.46 billion Ruwais fertiliser project and a Dh 3.67 billion aromatics venture. Borouge, a joint venture between ADNOC, holding 60 per cent, and Denmark-based Borealis, holding 40 percent, was established in 1997 to construct, own, operate and maintain the ethylene and polyethylene plant.

The complex, which was completed early this year, is one of the largest polyethylene production facilities in the Middle East. In May this year, two ADNOC subsidiaries, GASCO and Atheer, were merged, to integrate the glas production and transmission sectors. The Emirates Petroleum Products Co., EPPCO, condensate and light crude refinery in Jebel Ali, Dubai, was commissioned in May 1999. The plant will have a capacity of 60,000 bpd with naphtha comprising more than half. Another Dh 600 million refinery in Sharjah at Hamriyyah Free Zone started its operation in mid-1999. Such developments are sure to consolidate the UAE's position as one of the world's leading oil, gas and petrochemical producers throughout this century. (The Emirates News Agency, WAM)


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