A Long-Term Approach: The Emirates Are Pursuing a Policy of Regional Cooperation to Get the Best out of Their Natural Gas Reserves
Ford, Neil, The Middle East
Rather than trying to compete with gas rich Qatar for regional and overseas markets, the UAE has adopted a policy of cooperation in its new gas marketing strategy, which, it is hoped, will reduce oil dependency in the longer term.
The UAE possesses the world's fifth biggest reserves of natural gas, after Russia, Iran, Saudi Arabia and Qatar. Of the 212 trillion cubic feet (tcf) of proven UAE reserves, the lion's share, some 196 tcf are located in Abu Dhabi. Associated gas on the Abu Al Bukhush and the non-associated Khuff fields are the most important known sources of gas in the emirate, although the sizeable Bab, Bu Hasa, Umm Shaif and Zakum fields all make valuable contributions.
One of the main motivations behind the government's determination to make the most of its gas reserves is the maturity of its oil fields. Many of the main fields have been in production for over 30 years and have passed their prime. However, given that production capacity is on an upward trend in the short term, the government's desire to focus on gas at this stage can be seen as a more far-sighted policy than that adopted by many other oil producers in a similar situation.
Improved oil production techniques coupled with the development of previously unexploited fields and a succession of offshore discoveries have boosted both reserves and output over the past decade. As in the gas sector, Abu Dhabi itself continues to hold the bulk of UAE oil reserves, possessing around 92bn barrels out of a national total of just under 98bn barrels.
An increasing proportion of natural gas production is to be used to boost oil production through injection. During the second half of 2002, the Abu Dhabi Marine Operating Company (Adma-Opco) and Zakum Development Company implemented the Pilot Gas Injection Project on the offshore Zakum field and other similar schemes are planned.
Reduced OPEC quotas have had a downturn on oil industry development. Unlike Dubai, which is not a member of the cartel, Abu Dhabi is unable to make the most of its production capacity of around 2.65m barrels a day (b/d) because of the total UAE quota of only 2.138m b/d.
However, there are no such restrictions in the gas sector, consequently most hydrocarbon sector growth is likely to come from gas projects over the next decade.
A string of projects
Over the past decade, the linchpin of UAE gas sector growth has been the Taweelah gas scheme, which involved the development of a huge industrial zone principally utilising natural gas as a feedstock. More recently, the Maqta pipeline from Abu Dhabi to Dubai was completed in May 2001 and once associated infrastructure is in place, capacity will reach 900m cubic feet a day (cf/d). Contracts have already been signed for 200m cf/d, for use in both power generation and new industry projects.
Within the Gulf as a whole, growth in demand for gas is likely to come from new power projects and from the development of the petrochemical sector. According to government figures, demand in Abu Dhabi is predicted to reach 4bn cf/d by the start of 2005, while Dubai is likely to offer additional scope for expansion.
The UAE's three-phase onshore natural gas development programme (OGD) has centred upon the construction of the Habshan gas processing facilities on the Bab oil and gas field. The first phase was completed in 1999 and was followed two years later by the construction of Habshan's first four trains. An initial $1bn was invested in OGD but this figure could be pushed significantly higher at a later date if more trains are constructed. …