Dubai — The UAE needs to keep importing liquefied natural gas and Qatari gas as the discovery of a huge shallow gas reservoir that is the world's biggest global find since 2005 will take years to develop, analysts said.
Abu Dhabi National Oil Co, the UAE's biggest oil producer pumping some 3 million b/d, made the discovery of the 80 trillion standard cubic feet of gas in Jebel Ali on the Dubai-Abu Dhabi border. ADNOC will develop it with Dubai's gas supplier, Dubai Supply Authority (DUSUP). According to Wood Mackenzie, the deposit is the largest global gas discovery since 2005, when the Galkynysh field in Turkmenistan was found.
ADNOC said the new gas will be wholly supplied to DUSUP, which feeds utilities and industrial companies in the UAE's second largest city with gas. Currently Dubai imports LNG to plug its gas deficit.
"Dubai's LNG imports are expected to peak this year and it is expected to start declining from 2021, in line with completion and start-up of new coal and solar power projects," said Siamak Adibi, head of the Middle East Gas Team at FGE. "LNG imports are expected to continue over the next 5-6 years, but it will not be surprising to see Dubai cease LNG imports from late this decade."
Currently, Qatar pipes 2 Bcf/d of gas to the UAE under an agreement that expires in 2032, accounting for nearly a third of total gas supply to OPEC's third largest oil producer.
"Abu Dhabi is already on track to be self-sufficient from Qatari gas in 2025-2026 but they are very likely to continue pipeline gas imports from Qatar until 2032," Adibi said. "With development of 80 tcf gas in Jebel Ali, a similar scenario is possible to happen for Dubai."
Gas production (marketed production) in the UAE is around 6.2 Bscf/d, while gas consumption is around 7.4 Bscf/d, FGE estimates.
The Jebel Ali reservoir is the second gas discovery announced in the UAE in a week. Last Monday, Eni and the UAE's Sharjah National Oil Corp. said they discovered gas and condensates in Sharjah, the country's third largest emirate. SNOC said it was the first onshore Sharjah discovery in 37 years, with the well achieving flow rates of up to 50 Mscf/d of lean gas and associated condensate.
The UAE and particularly ADNOC are exploring and developing gas fields with the help of international oil companies amid talk of reaching gas self-sufficiency and even exporting the commodity in the future.
"While the [Jebel Ali] discovery has the potential to bring the UAE one step closer to gas self-sufficiency, significant unknowns remain around development costs and volumes," said Samer Mosis, a senior analyst with S&P Global Platts Analytics. "In fact, the UAE is not short gas reserves. The issue is converting these reserves into firm production."
Platts Analytics expects the UAE to expand domestic gas production by around 1.4 Bscf/d through 2024.
Last year, Abu Dhabi's Supreme Petroleum Council announced increases in hydrocarbon recoverable reserves of 7 billion stock tank barrels of oil and 58 Tscf of conventional gas, bringing the total for Abu Dhabi to 105 billion STB of recoverable oil, 273 Tscf of conventional gas and 160 Tscf of unconventional gas resources.
With the help of Germany's Wintershall and Italy's Eni, ADNOC is developing the Ghasha ultra-sour gas concession which is expected to produce over 1.5 Bscf/d by around 2025. In addition, ADNOC plans to boost production from its Shah sour gas field from about 1.3 Bscf/d to 1.5 Bscf/d through a joint venture with Occidental Petroleum
"The shallow nature of the [Jebel Ali] discovery will also mean much lower development costs than some of Abu Dhabi's sour gas resources," said Liam Yates, research analyst, Middle East & North Africa upstream, Wood Mackenzie. "Longer term, the field is likely to play a pivotal role in the UAE's gas market and could lead to additional gas exports from the country."
At the same time, the UAE is boosting power generation from renewable energy to free up gas used in utilities for usage in other industries. UAE is also expected to start generating power from a nuclear reactor this year, making the seven-emirate federation the first Gulf country to go down the nuclear power generation route.