Dubai — Abu Dhabi National Oil Co., which currently pumps around 3 million b/d, can speed up plans to boost production capacity to 5 million b/d before 2030 as it spends as much as $30 billion on fields and accelerates exploration awards, analysts said.
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ADNOC announced on Wednesday plans to supply over 4 million b/d to markets in April and speed up capacity expansion. The state-owned company is following in the footsteps of Saudi Aramco, which announced plans to supply 12.3 million b/d in April and plans to ramp up output capacity by 1 million b/d to 13 million b/d.
"In order to supply 4 million b/d to the market in April this will require inventory draws to make up the difference, a similar story to the Saudis," said Tom Kenison, a Middle East upstream oil analyst at FGE Energy.
ADNOC has previously said it would reach a production capacity of 4 million b/d by 2020. The UAE pumped a record 3.336 million b/d in November 2018, according to its self-reported figures to OPEC. However, the IEA revised its figures for UAE's production in November 2019, estimating that the country pumped a record 3.45 million b/d due to higher exports to South Korea, India and Japan.
Analysts estimate that the UAE's current production capacity is over 3.5 million b/d and could rise to 4 million b/d by the end of the year, with increments mainly from ADNOC onshore and offshore concession Upper Zakum.
ADNOC is boosting its capacity with the help of international oil companies, who were awarded multi-year oil and gas concession in the past two years.
ADNOC Onshore, which pumps some 1.8 million b/d now, is expected to reach 2 million b/d by the end of this year. ADNOC has a 60% stake in the company. Other shareholders are BP (10%), Total(10%), CNPC (8%), JODCO (5%), CEFC (4%), and GS Energy (3%).
"The increase to 4 million b/d is coming from a whole range of fields, with Upper Zakum seeing the biggest gains," said Robin Mills, CEO of Dubai-based Qamar Energy.
ADNOC is also expected to speed up the expansion of Upper Zakum, the world's second-largest offshore field, by potentially ramping up capacity to 750,000 b/d this year from the current 650,000 b/d.
ADNOC holds a 60% stake in the concession, with Exxon Mobil owning a 28% stake and Japan Oil Development Co. the remainder.
"Whilst the sustained 4 million b/d target is still a few months off, in the short term it will be possible to work the reservoirs harder to increase output, before the extra capacity is ready," said Liam Yates, Middle East upstream analyst at Wood Mackenzie.
To speed up plans to reach 5 million b/d, ADNOC may have to implement new measures such as accelerating the award of a second licensing round and tapping smaller and unconventional fields.
"Overall an increase of 1 million b/d (from 4 million to 5 million b/d) would likely cost in the order of $20-30 billion," said Mills.
ADNOC could also speed up plans to raise production capacity at Upper Zakum to 1 million b/d before the original target of 2024 as well as accelerate the expansion at the offshore concession of SARB and Umm Lulu to 215,000 b/d before 2023 from around 129,000 b/d now.
"If they wanted to add an additional 1 million b/d capacity prior to 2030 then we could expect to see an increase in rig mobilization and utilization to support development drilling at key fields," said Kenison.
"The license awards from 2018 and 2019 could provide significant upside and be fast tracked by the partners involved."
ADNOC launched in 2018 its first ever oil and gas licensing round, with Eni, Occidental Petroleum and INPEX Corporation among the winners.
The national oil company in May launched a second bidding round for five oil and gas blocks, which have yet to be awarded.
"In the recent years, UAE has attracted major international operators in the licensing rounds awarding promising blocks," said Aditya Saraswat, Rystad Energy's senior analyst. "Future discoveries within these blocks and potential upcoming rounds could help narrow down the margin towards the 2030 target."
In 2018, ADNOC also awarded a $1.6 billion contract to CNPC to conduct by 2024 a 3D onshore and offshore seismic survey to look for new oil and gas reserves.
"Exploration is also expected to play a part in the 5 million b/d target, so accelerating this could help to achieve it," said Yates.