As the United Arab Emirates closes in on its oil production capacity target of 5 million barrels per day in 2027, one question is whether it will stop there or pursue further expansion.
Industry sources say Abu Dhabi previously mulled raising output capacity to as much as 5.5 million b/d — and even 6 million b/d — but those plans were abandoned at the time due to high costs. What’s clear is that Upper Zakum, in which US Exxon Mobil (28%) and Japan’s Inpex (12%) are partners alongside state Abu Dhabi National Oil Co. (Adnoc) with 60%, would likely play a key role in achieving any further capacity expansion targets. The partners have been discussing an output expansion at Upper Zakum for some time, but industry sources have repeatedly stressed that negotiations on commercial terms have held up any concrete agreement. Exxon last week presented a relatively upbeat message: “We will participate in some form in the expansion of Upper Zakum,” upstream head Liam Mallon told the Energy Intelligence Forum in London in late November. “Exactly when and how that might get talked about is yet to be determined, but we will participate in the expansion.”
Current capacity in Abu Dhabi, the UAE’s largest emirate and producer of almost all the country's oil, currently stands at about 4.85 million b/d, up from above 4.2 million b/d in 2022, according to official Adnoc data updated this year. Adnoc has not revealed in detail where the capacity additions toward its 5 million b/d target would come from, but there have been upstream expansions both onshore and offshore in recent years. Onshore, capacity has increased at the giant Bab, Bu Hasa and Asab fields, as well as smaller ones; offshore, major contributions have come from the giant Upper and Lower Zakum fields, which are estimated to have reached capacity levels of around 1.1 million b/d and 450,000 b/d, respectively. Capacity has also been added at the Satah al-Ras Boot/Umm Lulu and the Nasr/Umm Shaif concessions, among other, smaller fields. Of the present capacity, slightly more than half is estimated to be offshore. Exploration, meanwhile, has been under way in numerous blocks awarded in two upstream licensing rounds since 2018 — detailed results for which have yet to be announced. Some of Abu Dhabi’s exploration blocks would likely feature in any further expansion, but the extent of this is another of the open questions.
ADNOC has pushed forward at pace with oil and gas production capacity expansions in Abu Dhabi at a time when upstream investment elsewhere around the world has been lagging. The all-out drive to pump hydrocarbons supports Abu Dhabi’s plans to position itself as one of the world’s largest low-cost, low-carbon producers — seen as giving it a competitive advantage over most of its rivals in the longer term. ADNOC’s push to raise output is also a way of accelerating the monetization of the UAE’s large hydrocarbon reserves as the world’s shift toward decarbonization continues. By pumping more oil and gas now, and maximizing revenues for transition investments,
ADNOC's corporate game plan fits into the UAE's broader target of building a diversified economy for the future. The UAE has committed to achieving net-zero emissions by 2050 by investing more in renewables, applying technologies such as artificial intelligence and carbon capture and storage at scale, and developing low-carbon hydrogen and other clean-fuel projects. Adding more nuclear power capacity to the UAE's existing 5.6 gigawatts could also be in the cards. But the oil capacity expansion has also coincided with sustained Opec-plus cuts, which are constraining UAE crude output, excluding condensate, to about 2.9 million b/d, according to Energy Intelligence estimates, leaving an estimated 1.9 million b/d of spare capacity. The UAE will see its production baseline increase by 300,000 b/d — to be gradually implemented from Apr. 1 over an 18-month period, under a plan agreed in June and updated this week — which should help. Separately, the planned unwinding of 2.2 million b/d of voluntary output cuts by eight OPEC-plus states, including the UAE — now due to start in April 2025 and stretch over 18 months — will further increase the Gulf state's allocation. While the UAE has been keen to put its idle capacity to work, UAE officials have made it clear that OPEC-plus unity remains a priority.
Source :
Energy Intelligence
