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Abu Dhabi confirms massive oil discovery, set to add Dhs160bn to the UAE’s economy

Abu Dhabi confirms massive oil discovery, set to add Dhs160bn to the UAE’s economy

The Supreme Petroleum Council gave approvals for ADNOC to award exploration blocks in Abu Dhabi’s second competitive block bid round

Abu Dhabi-based Supreme Petroleum Council (SPC) has confirmed the discovery of an estimated 22 billion stock tank barrels (STB) of unconventional oil resources located onshore, and an increase in conventional oil reserves of 2 billion STB in the capital emirate.

The announcements were made following the SPC meeting presided over by Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and vice-chairman of the SPC.

The announcement of the oil discovery exceeds some of Abu Dhabi’s major fields in terms of resources. The resource assessment was supported by extensive well data as well as a dedicated appraisal programme by ADNOC covering an area of 25,000 square kilometers onshore in the emirate.

The 2 billion STB of conventional oil reserves announced by the SPC increases the UAE’s conventional oil reserves base to 107 billion STB of recoverable oil, strengthening the country’s position in global rankings as the holder of the sixth-largest oil reserves, official news agency WAM reported.

This increase in reserves is a result of the ongoing maturation of ADNOC’s developments towards its 5 million barrels per day (mmbpd) oil production capacity target by 2030, and its appraisal activities, particularly in the Al Nouf field.

Both the conventional and unconventional oil resources offer the potential to provide ADNOC with additional amounts of Murban-grade crude, its signature grade crude, recognised for its intrinsic chemical qualities and consistent and stable production volumes.

These additions to the UAE’s hydrocarbons base follows the announcement in November 2019 by the SPC of increases in hydrocarbon reserves of 7 billion STB of oil, 58 trillion standard cubic feet (TSCF) of conventional gas, and 160 TSCF of unconventional recoverable gas resources.

Read: UAE now ranks sixth worldwide for oil and gas reserves

ADNOC’s capital expenditure approval
At the meeting, the SPC also approved ADNOC’s capital expenditure plan of Dhs448bn ($122bn) for 2021-2025. As part of this plan, ADNOC aims to drive over Dhs160bn ($43.6bn) back into the UAE economy between 2021-2025, enabled by its In-Country Value (ICV) programme.

Read more: Abu Dhabi’s ADNOC signs agreement with Mubadala, ENEC to partner on In-Country Value programme

In addition, the SPC gave approval for ADNOC to award exploration blocks in Abu Dhabi’s second competitive block bid round which was launched in 2019.

The SPC also reviewed the transformation in ADNOC’s marketing, supply and trading (MS&T) directorate, which has evolved to offer customers a broader service, while further increasing the value from every barrel that ADNOC produces, refines and sells. The directorate has transformed into a more integrated shipping and logistics and trading-focused entity, establishing two new trading companies – ADNOC Trading (AT) and ADNOC Global Trading (AGT).

On the discovery of unconventional oil resources and an increase in its reserves, Sheikh Mohamed bin Zayed said the achievement is a testament to ADNOC’s relentless efforts to unlock and maximise value from the UAE’s hydrocarbon reserves.

“We are thankful for the support and guidance of His Highness Sheikh Mohamed bin Zayed and the SPC in steering ADNOC through a very challenging year where we have had to navigate Covid-19 and volatile energy markets,” said Dr. Sultan Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology and ADNOC group CEO.

“Following the SPC’s approval of ADNOC’s CAPEX, we are well-positioned to continue driving long-term and sustainable value for the UAE while creating opportunities for local businesses and private-sector jobs for Emiratis through our in-country value target.”

“Today’s announcement by the SPC of the discovery of recoverable unconventional oil resources demonstrates how ADNOC is efficiently expediting the exploration and development of Abu Dhabi’s unconventional resources and marks a major milestone as the nation’s unconventional industry evolves.

“In parallel, we are developing large-scale capital projects in Ruwais to further stretch the margin from each barrel of oil we produce as we deliver on our downstream expansion strategy – at the heart of which are our plans to develop Ruwais into a dynamic, global hub for the UAE’s industrial growth and economic diversification – and we are strengthening our marketing, supply, and trading capabilities to unlock greater value from our products.”

ADNOC’s CAPEX plan will enable it to drive upstream growth, progress downstream expansion and further strengthen the company’s marketing and trading capabilities.

To underpin this competitiveness, Sheikh Mohamed bin Zayed mandated ADNOC to explore potential opportunities in hydrogen with the ambition to position the UAE as a leader. Meanwhile, ADNOC’s downstream expansion continues to prioritise the transformation of Ruwais into a globally competitive chemicals and industrial hub.

ADNOC delivered Dhs62bn ($16.8bn) in foreign direct investment (FDI) to the UAE this year, taking the total FDI ADNOC has driven since 2016 to Dhs237bn ($64.5bn).

The new discovered resources will further strengthen the UAE’s role as a resource holder with high-quality crude grades, underpinning its position as a reliable energy provider to the world. This year, ADNOC successfully increased its crude oil production capacity to over 4 million barrels per day (mmbpd).

Following the SPC’s approval for ADNOC to award exploration blocks in the Abu Dhabi 2019 Block Bid Round, the company is set to announce the successful bidders.

Based on existing data from petroleum system studies, seismic surveys, exploration and appraisal wells data, estimates suggest the blocks in this second bid round hold multiple billion barrels of oil and multiple trillion cubic feet of natural gas.

ADNOC is also strengthening its marketing and trading capabilities. As part of this effort, AGT – a joint venture with Eni and OMV – is set to begin the trading of refined products before the end of the year.

In addition, ADNOC will expand its shipping capabilities by purchasing a fleet of Very Large Crude Carriers (VLCCs), through ADNOC Logistics and Services.

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