Abu Dhabi will be at least a year late in boosting its crude-production capacity to a record 3.5 million barrels a day, officials at the state-owned oil company said.
The emirate will increase capacity only to 3.4 million barrels a day by the end of 2017, Qasem Al Kayoumi, the offshore exploration chief at Abu Dhabi National Oil Co., said at a conference in Abu Dhabi. The expansion project may not be completed until 2019, Ali Rashid Al Jarwan, who heads one of Adnoc’s offshore production units, said at the event.
Adnoc, with a current capacity of about 3 million barrels a day, was targeting an increase of 500,000 by the end of 2017. The company will now probably add the final 100,000 barrels of daily capacity in 2018, Al Kayoumi said. “This is because of some normal delays in such a large project,” he told reporters on Tuesday. “There have been changes in scope.”
Abu Dhabi, the largest sheikhdom in the United Arab Emirates, holds most of the nation’s oil, about 6 percent of global reserves. Like other Persian Gulf producers, Abu Dhabi is drilling wells to maintain or increase production as it depletes older fields in the face of rising demand. The U.A.E. and other members of the Organization of Petroleum Exporting Countries are to meet Friday in Vienna to assess output policy.
Crude prices haven’t bounced back completely from a 50 percent drop last year amid a surge in supply of U.S. shale oil. Brent crude, a global benchmark, was at $64.91 a barrel on Wednesday at 3 p.m. in London, up 13 percent in 2015. Adnoc is cutting operating expenses this year by about 10 percent to offset some of the revenue lost to lower oil prices, Al Jarwan and Al Kayoumi said.
The delay in Abu Dhabi’s capacity expansion “makes perfect sense,” according to Ole Hansen, head of commodity strategy at Copenhagen-based Saxo Bank A/S. “One of the richest oil nations out there is in no hurry to speed up production, instead opting to keep it in the ground for a later date. With Iraq and Saudi Arabia beefing up production, I don’t think a reduction from Abu Dhabi would have that big an effect at this stage” on the market, he said by e-mail.
Robin Mills of Dubai-based consultants Manaar Energy was already expecting “the target would slip to 2020,” he said Tuesday in an e-mail. “I think the market was probably expecting this and the volumetric impact is not massive.”
World demand will grow by an average of 1.2 percent through 2020, when it will reach 99.1 million barrels a day, the International Energy Agency said in a February report. Consumption will outpace gains in production capacity over that period by about 1.5 million barrels a day, the Paris-based energy adviser said.
Adnoc will deploy 100 drilling rigs in the emirate by the end of this year compared with 69 in 2014, said Al Jarwan, the chief executive officer of Abu Dhabi Marine Operating Co., known as ADMA-OPCO, the Adnoc unit running some of the emirate’s offshore fields. The rig count will rise to about 120 in 2017 and 2018 as the project to raise capacity nears completion, then decline to 103 from 2021 through 2024, he said.
Abu Dhabi currently pumps about 2.85 million barrels a day of crude oil and 250,000 of condensate, Al Jarwan said.
The oil-production concession for companies operating ADMA-OPCO’s fields expires in 2018. Adnoc may seek bids as early as next year from companies seeking stakes in a new venture, Al Jarwan said. Adnoc has hired a consultant to evaluate the fields and bidding procedures, Al Jarwan and Al Kayoumi said.