ECONOMIC DEVELOPMENT - UAE Interact

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132UNITED ARAB EMIRATES YEARBOOK 2006ECONOMIC DEVELOPMENT133over recent years, a programme of field development (entailing the drilling of infillwells, horizontal production wells and water injectors) has raised its reserveproductionratio and 2004 was the first time in recent years that production wasactually up on the previous year’s figures. DPC has installed water and gas injectionfacilities on a large scale to maximise recovery rates, and all the associated gasproduced at its four fields is now re-injected into oil reservoirs. Condensate isalso produced from the wholly government-owned onshore Margham field. Thecalculation on how long Dubai can keep its oil wells flowing depends on which setof figures one adopts for recoverable reserves. According to the French ComitéProfessionnel du Pétrole, Dubai produced 340,000 b/d in 2003 and 350,000 b/din 2004. This analysis indicates that it has a reserve-production ratio of 31.3 years.While oil revenues have played an important part in Dubai’s development,the emirate has followed a vigorous strategy of reducing its dependence onhydrocarbons. The sector accounted for 6.7 per cent of GDP in 2004 comparedto 24 per cent ten years previously or 50 per cent 20 years ago, in 1985. Dubai’sgovernment expects the figure to reach less than 1 per cent by 2010.SharjahSharjah’s oil reserves are put at 1.5 billion barrels of crude oil and condensate.The three onshore gas and condensate fields account for the bulk of the emirate’shydrocarbon reserves, since the Mubarak field contains less than 50 million barrelsof oil and 1500 billion cubic feet of associated gas.The emirate’s hydrocarbon production has been in decline since the mid-1990s.Following a similar trend to that in Dubai, production in 2004 was actually upon the 2003 figure. Crude and condensate combined production was 48,000 b/din 2004 compared to 46,500 in 2003. Liquids production in 2004 was made upof about 6000 b/d of crude and 12,000 b/d of condensate from the offshoreMubarak field and 30,000 b/d of condensate from the onshore Saja’a field.Sharjah passes on 20 per cent of its revenues from Mubarak to Umm al-Qaiwainand 10 per cent to Ajman.and also holds exploration licences in the emirates of Sharjah, Ajman and Ummal-Qaiwain, has been reassessing a small offshore tract known as B structure,where a non-commercial find was made in the 1970s. Novus Petroleum, owned byan Indonesian conglomerate, was assigned exploration rights to the onshore Hagilacreage, in the northern part of Ra’s al-Khaimah, in 2002. Following completion ofa 2D seismic survey in 2003, the company has recently announced plans to drillan exploration well into a zone that is thought to contain gas-bearing structures.Umm al-QaiwainAt the present time, Umm al-Qaiwain’s sole interest in oil production remains its20 per cent share of the revenues derived from the offshore Mubarak field inSharjah, part of which lies under its territorial waters.EXPLORATION AND FIELD DEVELOPMENTAbu DhabiOil and gas exploration in Abu Dhabi is primarily carried out by companies withinthe ADNOC group. While most of this is undertaken by operating companiesADCO, ADMA-OPCO and ZADCO, ADNOC also has its own ‘sole risk’ programme.The exploration programme, which began in 1950, has already yielded hugereserves of oil, and the research emphasis has now shifted from finding newfields to a more thorough examination of existing known reserves, along withsome high-tech exploration of deep oil and gas prospects. The aim is to maximisethe output of each structure through improvements in extraction methods andexpansion programmes. It is predicted that efforts currently under way, involvingan investment of over US$10 billion, will raise the UAE’s sustainable crude outputcapacity from around 2.5 mb/d at the beginning of 2004 to 3 mb/d in 2006 and3.7 mb/d by 2010. The long awaited development programme planned for UpperZakum requires a very high level of technical expertise as a result of the lowreservoir pressure and porous rocks. Introduction of an additional technical partner,in the form of ExxonMobil, provided a boost to the project.Ra’s al-KhaimahRa’s al-Khaimah’s liquid hydrocarbon reserves have been estimated at 100 millionbarrels of crude and condensate, but its only production consists of 700 b/d ofcondensate from the Saleh field.There has been a recent surge of exploration activity in Ra’s al-Khaimah withthree companies active in this field. In 1996 the Ra’s al-Khaimah Oil and GasCompany was granted exploration licences for most of the emirate’s land andseabed (with the exception of the area around the Baih field or B structure). Itsfirst well, spudded in December 1997, went down as far as 17,850 feet butproved to be dry. Meanwhile, Atlantis Holdings, which was taken over by ChinaNational Chemicals Import and Export Corporation (Sinochem) in February 2003ADCOThe Company operates and produces oil mainly from five fields Asab, Bab, Bu Hasa,Sahil and Shah. These fields are linked to the storage and shipping facilities locatedat Jebel Dhanna, where tankers load crude oil for export to markets in various partsof the world. Oil production comes also from three other oil fields: Al Dabb’iya,Rumaitha and Shanayel.ADCO is continuing its programme of exploration to search for new reserves tooffset annual production and maintain reserve levels. Current exploration/appraisaltechniques are primarily based on the extensive use of 3D seismic surveys prior towildcat, appraisal and development drilling. These have recently included a 3Dsurvey of the Qusahwira/Mender and Zarrara/Mashhur areas for the appraisal of
134 135DOLPHIN ENERGYBy the third quarter of 2005, Dolphin Energy had taken substantial strides in theconstruction, marketing and financing of the Dolphin Gas Project, which isdue for completion by the end of 2006.This strategic energy initiative involves the production of natural gas fromQatar’s North Field, its processing at a dedicated plant in Qatar’s Ras LaffanIndustrial City – and transportation of the dry gas by subsea export pipelineacross joint UAE-Qatari waters to Abu Dhabi. On completion, some 2 billionstandard cubic feet of gas daily (scf/d) will be supplied through the exportpipeline to UAE and Omani markets.Following the award of major EPC contracts for its gas processing plant,offshore platforms and pipelaying in early 2004, Dolphin awarded its lastsubstantial EPC contract to the Technip/Al Jaber consortium in November2004 – for the gas receiving facilities at Al Taweelah, Abu Dhabi.Construction has progressed on the twin offshore platforms for Dolphin’sproduction wells in the North Field and also onshore facilities at the gas processingplant. 440,000 tons of pipe required for the export pipeline and other sealineshave been supplied from Japan, and pipelaying began in the fourth quarter.In 2005, two long-term gas sales agreements were signed, one with Dubai SupplyAuthority (DUSUP) and a further one with Oman. The new contracts follow earliergas sales agreements with Abu Dhabi Water and Electricity Authority (ADWEA),and Union Water and Electricity Company (UWEC).These four agreements are each of 25 years’ duration, and they will ensure thatsufficient gas flows through the export pipeline to achieve its initial maximumthroughput. A further short-term agreement has been signed in 2005 to supplyRa’s al-Khaimah with gas for a two-year period.Dolphin Energy continues to receive an average of 135 million cubic feet a day(mcf/d) of Omani gas, which it supplies to UWEC in Fujairah. Oman Oil Company(OOC) is supplying the gas for up to five years through Al Ain, via a link created byDolphin Energy with OOC’s Fahud-Sohar pipeline. The gas is being transportedfrom Al Ain to Fujairah to UWEC’s 656 MW power generation and 100 milliongallons a day (mg/d) plant through Dolphin Energy’s 182-kilometre, 24-inchpipeline, commissioned in January 2004.Dubai-based Emirates General Petroleum Corporation (Emarat) is responsible forthe operations and maintenance of this pipeline. Dolphin’s long-term gas suppliesfrom Qatar will be made available to Oman in subsequent years, once gas startsflowing from Qatar to the UAE.Dolphin Energy finalised the second stage of its financing in mid-2005. Thecompany agreed a conventional lending facility of US$2.45 billion in July with20 international and regional financial institutions, and signed an Islamic financingagreement in September for a further US$1 billion with 14 institutions. TheUS$3.45 billion financing arrangements have enabled Dolphin to repay the originalbridging loan of USS$1.36 billion, arranged in 2004 with a consortium of 16local, regional and international banks.Dolphin Energy is owned 51 per cent by Mubadala Development Company,which is itself wholly-owned by the Abu Dhabi government. Total of France andOccidental Petroleum (Oxy) of the US own 24.5 per cent each.
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