The Abu Dhabi National Oil Company (ADNOC) of the United Arab Emirates (UAE) is looking to increase its crude oil production capacity to 3.5 million bpd next year, from the current 3-million-bpd capacity, by splitting offshore concessions and bringing in new partners.
The offshore concession, currently operated by the Abu Dhabi Marine Operating Company (ADMA-OPCO) and expiring in March next year, will be split in order to unlock greater value and increase partnership opportunities, ADNOC said on Monday.
The announcement came a month after ADNOC said that it would expand partnerships and possibly list minority stakes in some of its services businesses with attractive growth and investment profiles.
Now the potential partners for the ADMA-OPCO are a mix of existing concession holders in ADNOC’s offshore fields and new participants, ADNOC said.
The current shareholders of the ADMA-OPCO company are BP with 14.67 percent, Total with 13.33 percent, and JODCO with a 12-percent stake. The Abu Dhabi government, via ADNOC, holds the other 60 percent.
But the plans for increased oil output come at a time when OPEC is trying to close ranks and to admonish non-complying members to make efforts to concentrate on their reduced production.
As part of the deal, the UAE has engaged to cut 139,000 bpd from its October 2016 and bring production below 2.874 million bpd. However, the UAE has not strictly complied with its share of the cuts in any of the months since the start of the deal in January.
Following Saudi Arabia’s pledge to do the same, the United Arab Emirates announced on Tuesday its plans to reduce oil exports beginning in September of this year.
The announcement was delivered on Twitter from UAE’s Minister of Energy, Suhail Mohamed Al Mazrouei, reiterating its commitment to share in OPEC production cut.
At the end of July, following Saudi Arabia’s pledge to do the same, the UAE announced its plans to reduce oil exports beginning in September of this year.
ADNOC’s plans to rely on offshore development to raise crude oil production are supported by the strategically located Port of Fujairah—the UAE’s only export terminal fully outside the Strait of Hormuz, UPI notes.
The Strait of Hormuz is the world’s most important chokepoint, with an oil flow of 18.5 million bpd in 2016, according to the EIA. In 2015, daily flow of oil through the strait accounted for 30 percent of all seaborne-traded crude oil and other liquids.
So the UAE has the Port of Fujairah—the second largest bunkering port in the world after Singapore—to export part of its offshore oil.
In September last year, UAE’s first berth for very large crude carriers (VLCC) started operations at the Port of Fujairah.
The Ruler of Fujairah stressed the keenness of the UAE, led by President His Highness Sheikh Khalifa bin Zayed Al Nahyan, to focus on the vital and strategic projects in the state and strengthen the economic position at the international level. He added that the strategic location of Fujairah puts the name of the emirate and the UAE on the regional and international energy oil trade map.