United Arab Emirates Oil & Gas Report Q3 2013 - New Market Study Published

From: Fast Market Research, Inc.
Published: Wed Aug 21 2013

An expansion of production capacity from increased recovery and the development of marginal fields will see billions invested in the country's upstream. The expiration of Abu Dhabi's 75-year-old onshore concessions holds risks for current concession holders, but could see new capital and players move in as the country seeks to increase production onshore as well. We forecast output to average around 3.2mn barrels per day (b/d) in 2013 and expect the UAE will largely reach its goal of 3.5mn b/d by 2018. However, with rising OPEC and non-OPEC supplies, output could be scaled back to support prices given a bearish demand outlook in the developed world and competition for Asian customers. Gas supplies will continue to tighten as demand grows, but new import terminals and new supplies from complex deposits will generate significant investments in the sector.

Full Report Details at
- http://www.fastmr.com/prod/648292_united_arab_emirates_oil_gas_report_q3_2013.aspx?afid=303

We highlight the following trends and developments in the UAE's oil and gas sector:

* An ambitious upstream investment plan will raise production capacity in the UAE with increased recovery from onshore and offshore fields set to see billions in contracts awarded as part of a plan to raise production capacity. Abu Dhabi is planning to spend US$60bn over the next five years to raise production capacity above 3.5mn b/d by 2018, a target we believe the UAE is largely on track to meet.
* However, there is downside risk to the increased production. We highlight the ever-present potential of project delays as large investment plans materialise, but more so that a combination of rising supplies globally and emerging markets where consumption will limit the room for additional supply from the UAE without placing downward pressure on prices.
* With around 1mn barrels per day (b/d) of Iranian crude removed from the oil market due to sanctions, the UAE is one of the countries taking up the slack - taking advantage of investment in production capacity.
* Abu Dhabi's Supreme Petroleum Council recently refused to extend the bidding process for the 75-yearold onshore concessions operated by a host of international oil companies (IOCs). Uncertainty regarding the process and a shorter decision window have upped the pressure on Abu Dhabi National Oil Company (ADNOC). There are already reports of confusion from new bidders to the process. A push to diversify the country's upstream participants, in particular to bring in more Asian players, could come at the expense of existing IOCs with interest.
* Gas production will continue to grow, with some US$25bn in projects planned for Abu Dhabi alone. The Umm Shaif-Habshan and the Shah development projects area among those supporting our forecast for gas output to reach 69bn cubic metres (bcm) by 2017.
* However, imports will also increase, with progress on a planned floating liquefied natural gas (FLNG) import terminal at the port of Fujairah and a potential expansion of the Dolphin import pipeline.

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