Boston, MA -- (ReleaseWire) -- 05/05/2014 -- The UAE's stable investment climate and its robust attempts to maximise the potential of its significant oil and natural gas reserves will continue to make it a major focus of upstream investment. This, in turn, will bring it closer to its target of increasing production to 3.6mn barrels per day (b/d) by 2019. We expect steady growth in oil and gas production over the course of our forecast period. Greater attempts at increasing energy efficiency, efforts to reduce waste and increasing natural gas production will be critical to limiting the UAE's import requirement as consumption continues to outstrip demand, even with some US $25bn set to be investment in gas projects in Abu Dhabi alone.
We highlight the following trends and developments in the UAE's oil and gas sector:
- The UAE's ambitious upstream investment plan will raise its production capacity while increasing recovery from onshore and offshore fields, resulting in 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 3.6mn barrels per day (b/d) by 2019, a target we believe the UAE is largely on track to meet. However, reports that plans to reach this capacity may be delayed until 2020 as result of delays underscore the risk of such a large investment programme. A new study of the region by Ernst & Young found that the UAE, Oman and Iraq represented almost 60% of the total number of upstream oil and natural gas transactions in the Middle East during 2013.
- We expect crude oil, NGL and other liquids production for 2014 to average 3.24mn b/d. Although production did slip slightly in February, as other OPEC members gradually make room for Iraqi production, we expect the UAE's production growth to continue into 2014. This would be on the back of significant upstream investment to drive growth at annual average of more than 2% from 2015 to 2022. According to our forecast the UAE will be producing 3.90mn b/d by the end of our forecast period in 2023.
- Although the UAE is setting forth ambitious targets to reduce consumption and diversify the energy mix, an official 2011 study indicated oil consumption would rise nearly 30% by the end of the decade.
- The UAE hopes to erase a deficit in gasoline and diesel products, while boosting production of LPG among other products. The UAE is hoping the start of new units at Ruwais will allow for self-sufficiency in gasoline production. Expansion of downstream capacity could also come in Fujairah and Dubai; however, the latter project is more uncertain given a lack of details and rising capacity elsewhere. Yet such projects are consistent with a strategy seen in the UAE and elsewhere in the region with producers hoping to expand refining capacity to both meet local demand but in order to export higher value added products.
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