United Arab Emirates: A Guide To Abu Dhabi Oil And Gas 2019-2020

Last Updated: 17 October 2019
Article by STA Law Firm
Most Read Contributor in United Arab Emirates, October 2019

Abu Dhabi, the capital of the United Arab Emirates, witnessed a massive average of 2.86 mill barrels of oil, in the first half of 2018 itself. Call it A GUIDE TO ABU DHABI OIL AND GAS fate? No, Abu Dhabi is the only economy in the United Arab Emirates that has petroleum possessions in its womb. This womb is precious for the development of, not only the emirate but also the country, in all. Abu Dhabi has maintained its position in the list of Organisation of Petroleum Exporting Countries (the OPEC), to be the fourth-ranked when it comes to the production of crude oil. Abu Dhabi reserves a whopping 95% of UAE's proven petroleum reserves.

It was only in 1939 that the UAE signed its first oil concession agreement, which covered the whole of Abu Dhabi, including both onshore and offshore. Subsequently, multiple contracts were entered by other Emirates in the UAE.

1. Legal Framework:

The Constitution of the UAE makes explicit provisions that the natural wealth and resources belong to the public and that they are the public property whose 'community' has the full right to harness it in the best interest of the economy. In consonance of the UAE Constitution, the Abu Dhabi laws have also applied similar primary regulations for its oil and gas industry.

1.1 Abu Dhabi's Supreme Petroleum Council (the SPC):

The SPC is the supreme and the sole governing body, which is conferred with the responsibility of the oil and gas industry in the Emirate of Abu Dhabi. Since, its establishment, SPC has taken over the varied duties for the board of directors (the BOD) of Abu Dhabi National Oil Company (the ADNOC). It has moreover, assumed the functions of the new department for petroleum in the Abu Dhabi government. SPC runs with the below purposes:

  1. Formulation and overseeing of the implements of the emirate's petroleum policy;
  2. Following up with the said implementations across various regions of the industry;
  3. Ensuring that the goals and aims are established and accomplished;
  4. Promulgation of the regulations in the field of petroleum in the emirate;
  5. Ensuring its implementation and enforcemen
  6. Responsibility of fixing the fiscal framework via its secretariat;
  7. Overseeing the tax and royalty collection and assessment;
  8. Issuance of decisions apparent for the management of ADNOC, and other petroleum companies as well

The ruling body of the emirate is the chairperson of SPC and is conclusive of other nine (9) members which comprise of the prominent members of the ruling family, etc.

1.2 The Abu Dhabi Law Number 9 of 1978:

The primary piece of legislation overseeing the petroleum operations in the Emirate is Abu Dhabi Law Number 8 of 1978 (the Oil and Gas Law) concerning the Conservation of Petroleum Resources. Even though this law is drafted when all is said in done terms, it forces exclusive expectations on the business, specifically requiring the utilisation of 'the most proficient and scientific strategies' and the utilisation of materials and types of machinery that fit in with global benchmarks.

The Oil and Gas Law covers all phases of upstream oil and gas operations. The development requires earlier consent and permission, including the accommodation of nitty-gritty examinations, and specialized and monetary assessments and evaluations. All exploration activities require pre-established approvals, and any information acquired must be submitted to the SPC, together with interpretations of the data.

The law additionally contains special arrangements and provisions controlling the upstream, downstream and midstream operations, completing, revising and relinquishment of wells, including the procedure for acquiring consent, least models to be met and revealing commitments.

On production, an administrator must submit month to month production reports for each production, including daily rates, proportions, wellhead weight, dregs and water content, and the API gravity of oil created. Examinations must be led to reservoir behaviour. Administrators should likewise direct oil-recuperation tasks, including gas, water or steam infusion assuming actually and monetarily legitimised to keep up a generation with the approvals of the SPC and to record month to month reports in regard of those exercises.

1.3 Truces (Treaties)

The UAE consented to the New York Arbitration Convention on the Recognition and Enforcement of Foreign Arbitral Awards on 21 August 2006. Abu Dhabi government-owned organisations frequently necessitate that agreements to which they are a party, especially if the spot of execution is inside the Emirate, are represented by Abu Dhabi Law with debates being liable to the assertion in Abu Dhabi. The UAE has marked reciprocal arrangements with more than 50 nations, including China, France, Germany, Italy, South Korea and the United Kingdom, most of the whose international oil organizations (IOCs) or national oil organizations (NOCs) have put resources into the emirate's oil division.

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