Will 2020 be UAE’s big year for Oil and Gas?
The UAE will hold its first World Expo in Dubai on 20 October 2020, for 173 days. In the lead-up to this much anticipated global event, the region is pumping in extra efforts to boost its economy and foster stronger relations with its strategic global partners. An example is how a collaboration is already taking place with US to oversee the fundraising, project management, design, construction and operation of the event.
As a world leader in the oil and gas sector, the outlook for the United Arab Emirates (UAE) is looking positive, with oil prices projected to increase to USD70 per barrel by 2030 – as reported by World Bank. According to Reuters, demand is also expected to climb to 1.4 million barrels per day (bpd) from 1.2 million bpd in 2019 by 2020. The UAE government has also committed to support plans for mergers between petroleum companies to cut production costs as well as generate more profit with better targeted products and services.
We set out below the upcoming projects that are slated for 2020 which are expected to contribute to the production of as well as demand for oil and gas:
- Abu Dhabi National Oil Company (ADNOC) to upstream drilling activity
ADNOC has been working on how to make its upstream team more profitable since 2018. How they intend on achieving this goal is through the optimisation of its production capacity, the continued development of enhanced oil recovery and the creation of partnerships that will give ADNOC access to expertise, capital, technology and new markets.
As a result, Gulf News reported that ADNOC intends to grow its conventional drilling activity by 40% by 2025 and substantially ramp up the number of its unconventional wells in its upstream arm over the next few years. This is in line with its target of producing four million barrels of oil per day by the end of 2020 and potentially five million by 2025.
- Dragon Oil’s USD13 billion investment in existing projects over the next 10 years
Dragon Oil is one of Dubai’s renowned upstream oil and gas exploration, development and production company. The company has recently set a budget of USD500 million for acquisitions in 2019, and plans to invest USD13 billion over the next decade to develop existing projects.
Currently, Dragon Oil’s plan is to increase production in the Cheleken block to 100,000 bpd, and invest more into the Al Faihaa field in south Iraq, where the company has recently started operations and production.
Dragon Oil’s shares is expected to rise to 45%, requiring around USD5 billion in investments. Dragon Oil These two projects aim to produce a combined 200,000 bpd by 2025.
- Brooge Petroleum & Gas Investment Co. FZC (BPGIC) fuel refinery opening in Fujairah
This fuel refinery will be the first of its kind in the Middle East and North Africa (MENA) to comply with new regulations of the International Maritime Organisation (IMO) 2020. In line with IMO’s new regulations set to take effect in 2020, BPGIC ships will be required to use marine fuels with sulfur. To achieve this, BPGIC will be capping sulfur content in shipping fuels with the first phase of the planned refinery to be completed by first-quarter 2020.
- Wintershall as first German company to be awarded an upstream contract in the UAE
Wintershall, which is part of BASF Group, was awarded a 10% stake in the Ghasha concession.
Wintershall has secured 40-year rights in this scheme which is anticipated to produce more than 1.5 billion cubic feet of gas and more than 120,000 barrels of condensate a day.
Wintershall is the first German company to be awarded an upstream contract in the UAE. Abu Dhabi has large reserves of sour gas that contains sulphur, and seek strategic support from Germany who possess similar resources, for development of its concessions.
What projects have been delayed for a 2020 start?
Some of these projects that will potentially contribute to greater returns of investment include:
This is one of the world’s largest offshore oil fields that is being developed by a consortium that includes oil company ExxonMobil Corp. ADNOC's Upper Zakum expansion is targeting 2.2 billion bpd and slated for on-stream by 2024.
Other projects on the same track are:
- Iraq's West Qurna 2 expansion – targeting 900 million bpd and slated for on-stream by 2020
- Iraq's Majnoon expansion – targeting 450,000 bpd and slated for on-stream by 2020
- BPGIC's Khazzan phase 2 in Oman – targeting 10.5 tcf of gas and around 350 million barrels of condensate, slated for on-stream by 2021
More often than not, major projects are prone to delays and there can be various causes – from delay of purchasing equipment to lack of skilled and qualified engineers.
Sufficient talent in the workforce is needed to support these projects in the upstream domain. A shortage in labor may result in further delays of new and existing projects, dampening the profitability of the sector.
How is the job market looking like for oil and gas?
2020 will be a big year for the UAE, and the job market for oil and gas has been stable with the constant influx of projects. Resonating with this trend, National Bank of Abu Dhabi also reported recently that it is unlikely for the region to experience any layoffs in the region’s oil and gas industry. According to the Economist, this is due to UAE’s oil production industry which is projected to increase as long as UAE keeps upgrading its upstream facilities.
If you are looking for opportunities within UAE’s upstream oil and gas market, or if your company is looking for niche talent to support your organisation’s upstream strategy, do drop us an email at [email protected]. You can also find out more about upcoming trends and industry insights on our Linkedin page.