Industry Trend Analysis - Prepping For Growth From Offshore - APR 2018

BMI View: The addition of Eni to offshore concessions in the UAE indicates the country is preparing to expand production. The offshore will be the centre of oil production growth, given stabilisation of onshore output, as well as being essential to meet the UAE's production capacity target.

The UAE is progressing efforts to add joint venture partners to its major offshore oil concessions, with the introduction of Eni to the Lower Zakum and Umm Shaif concessions. Building the 40% non- ADNOC owned share of the major concessions in the country will be a key element of achieving the governments production capacity target of 3.5mn b/d by 2020. Current production is around 2.9mn b/d, and new investment will be essential to increasing recovery from major fields.The onshore concession in Abu Dhabi was completed with the addition of China's CEFC in February 2017, and is tasked with sustaining oil output at around 1.6-1.8mn b/d. Growth will come from the offshore.

Eni's entry into the offshore concession is an indication the UAE is more seriously preparing its oil sector for growth, once the OPEC/non-OPEC production agreement has been terminated. The current agreement runs to the end of 2018, with the next ordinary OPEC meeting which may provide more direction on the future of the agreement, set for June 22. With the onshore concession targeting production stabilisation, it will be the UAE's offshore assets where it will grow production capacity. Part of that will come from the Upper Zakum field, where ADNOC, ExxonMobil and INPEX are due to launch a 100,000b/d expansion phase as soon as the end of 2018.

Onshore Concession Completed In February 2017
UAE Onshore Concession By Partner (%)
Source: News Reports, BMI

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