The United Arab Emirates (UAE) is important to world energy markets because it contains 98 billion barrels, or nearly 10 percent , of the world's proven oil reserves. The UAE also holds the world's fourth-largest natural gas reserves and produces significant amounts of liquefied natural gas.
Note: Information contained in this report is the best available as of October 2000 and can change.
The UAE’s natural gas reserves of 212 trillion cubic feet (Tcf) are the world's fourth largest after Russia, Iran, and Qatar. The largest reserves of 196.1 Tcf are located in Abu Dhabi. Sharjah, Dubai, and Ras al-Khaimah contain smaller reserves of 10.7 Tcf, 4.1 Tcf, and 1.1 Tcf, respectively.
In Abu Dhabi, the non-associated Khuff gas reservoirs beneath the Umm Shaif and Abu al-Bukhush oil fields rank among the world's largest. Current gas reserves are projected to last for about 150-170 years.
Increased domestic consumption of electricity and growing demand from the petrochemical industry have provided incentives for the UAE to increase its use of natural gas.
Over the last decade, gas consumption in Abu Dhabi has doubled, and is projected to reach 4 billion cubic feet per day (bcf/d) by 2005. The development of gas fields also increases exports of condensates, which are not subject to OPEC quotas.
The past few years have seen the UAE embark on a massive multi-billion dollar program of investment in its gas sector including a shift toward gas-fired power plants and the transformation of the Taweelah commercial district into a gas-based industrial zone. An ambitious plan, the Dolphin Project, to interconnect the gas grids of Qatar, the UAE, and Oman, also is planned.
The second phase of the UAE's $1-billion onshore gas development program (OGD-2) at the Habshan natural gas complex located directly over the huge Bab oil and gas field is currently underway.
This second phase includes the construction of three or four gas processing trains to process 1 bcf/d of gas, 300-500 tons per day (t/d) of natural gas liquids, 35,000-55,000 t/d of condensate and up to 2,100 t/d of sulphur.
The construction contract was awarded to Italy’s Snamprogetti in October 1998. Construction is scheduled to be completed in early 2001.
Another project closely linked with OGD-2 is the Asab gas development project, which was completed in 1999. The Asab development processes around 830 million cubic feet per day (Mmcf/d) of associated wet gas from the Thamama F and G reservoirs and produces up to 100,000 bbl/d of condensate for processing at the Ruwais refinery.
The gas will also support other industries in Ruwais and be re-injected into Asab reservoirs to maintain field pressure. The $700-million project was awarded to Snamprogetti in June 1997 by UAE’s Supreme Petroleum Council.
Dubai’s gas consumption is expected to grow by nearly 7 percent annually through 2005, due to expansion of the emirate's industrial sector, a switch to gas by its power stations, and the need for an enhanced oil recovery (EOR) system based on gas injections for its dwindling oil formations.
Dubai projects future demand will average 810 Mmcf/d in 2005, with major swings between summer and winter consumption patterns. Currently, Dubai’s entire gas supply comes from fellow UAE member Sharjah, which transports about 430 Mmcf/d at approximately $1.25/million Btu.
Amoco operates three fields and the 800-Mmcf/d Sajaa processing facility in conjunction with the Sharjah government.
A project to pipe gas from the offshore Khuff field to Dubai and the Taweelah industrial complex was abandoned in May 1999. Instead, Dubai will be connected to the main Abu Dhabi gas receiving station by a pipeline.
The Dolphin Project:
The Dolphin Project aims to develop links between the gas infrastructures of Qatar, the UAE, and Oman, with a possible future link to Pakistan. It will allow the export of non-associated gas from Qatar's massive offshore North Dome field.
A Statement of Principles for the project was signed in March 1999 between the UAE Offsets Group (UOG) and the Qatar General Petroleum Corporation (QGPC). Mobil Oil Qatar signed a memorandum of understanding covering its participation in the project's upstream component in July 1999.
Estimated to cost $8-10 billion over the next 6-7 years, the project will begin as a subsea pipeline from Ras Laffan in Qatar to a landfall in Abu Dhabi, which will then be extended to Dubai and northern Oman.
It will start at 48 inches in diameter, narrowing to 30 inches by the time it reaches Oman. In its initial phase, the pipeline is to carry 3 Bcf/d of Qatari gas to the UAE and Oman, accounting for nearly 10 percent of total world gas supplies shipped by pipeline.
In October 1999, UOG and ADNOC issued a joint declaration dividing up gas distribution between them. Gas from the Dolphin Project will be the exclusive supply for gas-fired power plants, except in the Western Region of Abu Dhabi, and will also supply gas for ADNOC contracts with Dubai.
Gas from the Dolphin Project will use the ADNOC distribution network until the project develops its own network. In March 2000, UOG signed a contract with two foreign firms, TotalFinaElf and Enron, after securing purchase agreements with Abu Dhabi, Dubai, and Oman.
UOG will hold 51 percent of the equity in the Dolphin Energy consortium, with the remaining portion equally split between Enron and TotalFinaElf.
TotalFinaElf will concentrate on the upstream, developing gas production from a block in the Qatari offshore North Field. Enron will build the pipelines connecting the North Field with the UAE and Oman. Negotiations with the Qatar General Petroleum Corporation (QGPC) on pricing for the gas are continuing, and the project cannot reach financial closure until the pricing issues have been resolved.
The planned extension from Oman to Pakistan may be built in 2005 or later, and would carry 1.5 Bcf/d onward to Pakistan. This phase of the project is dependent on Pakistan's ability to pay for the gas, which is questionable given the current weakness of its economy, but UAE officials involved in the planning of the project have said Pakistan is being included because they take a "long term view" of Pakistan's potential for economic development, including possible UAE investments in enterprises such as independent power plants (IPP's) in Pakistan which would consume the gas.
The UAE’s soaring demand for electric power, coupled with volatile swings in peak loads, led the Emirates in 1997 to form a Privatization Committee for the Water and Electricity Sector. In early 1998, the committee called for a comprehensive restructuring, including the elimination of the state-owned Abu Dhabi Water and Electricity Department (ADWED) in favor of sweeping privatization.
ADWED will be tranformed into a regulatory body, the Abu Dhabi Water and Electricity Authority (ADWEA). The government plans to take a majority holding in the new ventures with minority interests held by foreign firms.
Gradually, the government will privatize its shares through initial public offerings (IPOs), allowing UAE nationals to become shareholders.
TotalFinaElf and Tractebel were awarded a contract by ADWEA in August 2000 for an upgrade to the Taweelah A-1 plant, which will also give a 20 percent ownership stake to each of the foreign partners, with the rest remaining with ADWEA. The upgrade will bring the capacity of the plant to 1,350 megawatts (MW).
Another step in the reorganization is the expansion of the Taweelah cogeneration facility. The expansion, known as Taweelah A-2, is the UAE’s first independent water and power project (IWPP), and reached financial close in April 1999. It is the second independent power project in the Gulf after Oman’s al-Manah facility.
With a price tag of some $800 million, the expansion is to add about 763 megawatts (MW) of power and 50 million gallons of desalinated water to the UAE’s supplies. The first 370-MW came online in July 2000. The rest of the project is scheduled for completion by August 2001.
The Taweelah A-2 project is to be run by Emirates CMS Power, a joint venture between CMS Energy (40 percent ownership interest) and the newly-formed Emirates Power Company (EPC) (60 percent).
The al-Taweelah Power Company will manage the Taweelah B facility. The plant, which currently has six 122-MW steam turbines and six 13 million gallon-per-day (g/d) multi-stage flash units, is now undergoing a $360 million expansion.
The addition of two new gas-turbine units will bring the plant’s capacity to 1,220 MW and 103 million g/d of water. The Umm al-Nar Power Company will operate the plant by the same name with a 1,215-MW, 97-million-g/d facility, which will be upgraded with two new 3.5 million g/d desalination units.
The new units will run on steam already available at the site. The company will also operate the 120-MW Baniyas station.
The Abu Dhabi Water and Electricity Authority (ADWEA) currently is soliciting bids, due in January 2001, for the Shuweihat IPP project. The first phase of the project would have a capacity of 1,500 MW, with later additions possibly bringing capacity to 5,000 MW by 2009.
The UAE also is taking part in a $1 billion plan to build a regional power grid throughout the countries of the Gulf Cooperation Council (GCC). The first phase of the plan would link Saudi Arabia, Kuwait, Bahrain and Qatar; the UAE and Oman would join the grid in the second phase of the plan.
GCC electricity ministers signed a final agreement on the project in June 1999. The plan is based on the assumption that each country will have its own unified power grid, and the UAE is doing its part by connecting all the power stations along its western coast with the central region.
Minister of Petroleum and Mineral Resources: Obeid bin Saif al-Nasiri
Proven Oil Reserves (1/1/00E): 97.8 billion barrels
Crude Oil Production (3rd Quarter of 2000E): 2.27 million bbl/d
OPEC Crude Oil Production Quota (10/1/00): 2.29 million bbl/d (for whole UAE)
Oil Consumption (2000E): 321,000 bbl/d
Net Oil Exports (2000E): 2.0 million bbl/d
Major Crude Oil Customers (2000E): Japan (60 percent), other Far East (20%)
Crude Oil Refining Capacity (1/1/00E): 428,500 bbl/d
Natural Gas Reserves (1/1/00E): 212 trillion cubic feet (Tcf)
Natural Gas Production (1998E): 1.31 Tcf
Natural Gas Consumption (1998E): 1.07 Tcf
Natural Gas Exports (1998E): 0.25 Tcf
Natural Gas Imports (1998E): 0.02 Tcf
Electric Generation Capacity (1/1/98E): 5.5 gigawatts
Electricity Production (1998E): 20.1 billion kilowatthours
OIL AND GAS INDUSTRIES:
Organizations: Abu Dhabi National Oil Company (ADNOC); Operates three main oil and gas operating companies, five Service companies, three joint ventures to fully utilize the produced gas, two maritime transport companies for crude oil, refined product and LNG and one refined product distribution company.
Major Refineries: Ruwais (145,000 bbl/d), Emirates National Oil Company (ENOC) - Dubai (120,000), Umm al-Nar (88,500 bbl/d), Metro Oil (Fujairah)(75,000 bbl/d)
Major Gas Processing Plants: Bab, Bu Hasa, Das Island, Habshan (2), Jebel Ali, Ruwais.
Major Oil Fields: Abu Dhabi: ‘Asab, Bab, Bu Hasa, Al-Zakum Dubai: Fallah, Fateh, Southwest Fateh, Margham, Rashid Sharjah: Mubarak (near Abu Musa Island)
Major Associated Gas Fields: Abu Dhabi: Abu al-Bukhush, Bab, Bu Hasa, Umm Shaif, Zakum
Ports: Abu Dhabi: Das Island, Delma Island, Jebel as Dhanna, Ruwais, Abu al Bukhush, Al Mubarraz, Zirku Island, Port Zayed, Umm al Nar Dubai: Jebel Ali, Fateh, Port Rashid Sharjah: Mubarak
Source: United States Energy Information Administration.
© 2000 Mena Report (www.menareport.com)