Around $700 billion of energy projects are currently underway or planned in the United Arab Emirates, according to MEED, with Abu Dhabi occupying a dominant position within this sizeable market.
The question of who will win the bidding for Abu Dhabi's historic onshore oil concession is currently the subject of enormous interest across the industry, as the outcome will shape a significant element of the country's energy landscape for decades. The expiry of the 75-year-old concession in January this year saw a number of major oil companies lose their stake in the Abu Dhabi Company for Onshore Oil Operations (ADCO), which operates the onshore Bu Hasa, Bab, Asab, Sahil and Shah oil fields. The Abu Dhabi National Oil Company (ADNOC) held the controlling 60% stake and has held a 100% stake since January.
The ADCO concession is the largest in the country with the capacity to produce about 1.5 million barrels daily. The United Arab Emirates plans to increase its output capacity to 3.5 million barrels a day by 2017, from its current estimated maximum output capacity of around 2.85 million barrels a day.
ADNOC's recommendation on which parties should hold the new concession requires approval by the Supreme Petroleum Council, the emirate's highest oil policy body.
Hugh Fraser, Managing Partner of Andrews Kurth's Dubai office, said: "The award of the new concessions will have far-reaching consequences. At stake is one of the few major oil-producing areas in the Gulf where international companies are still allowed to hold an equity interest. As Saudi Arabia, Kuwait and other Gulf countries nationalised their oil industries over the years, Abu Dhabi has remained as one of the few in the region to allow foreign holdings in its oil industry.
The ADCO concession is the largest in the country so the new concession holders will be under pressure to maximise production as part of the UAE's drive to meet its higher output targets."
But the ADCO fields represent only part of the energy picture in the UAE, where the scale of requirements and investment continues to attract international interest.
"Looking at Abu Dhabi's current and planned capital expenditure programme there are a host of projects valued in excess of $10 billion, including the Zadco Upper Zakum artificial islands field development, ADCO onshore field development programmes, ADMA-OPCO offshore field developments and the Shah/Bab sour gas field developments," said Fraser.
Abu Dhabi will play host to more than 60,000 oil and gas professionals later this year for the 30th Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC), which runs from 10 to 13 November. Andrews Kurth is proud to be an associate sponsor of ADIPEC in 2014 and will be hosting an Intelligent Energy Law seminar at the event on the morning of 11 November looking at the growing demand for advanced technology across the region and the legal and commercial issues surrounding this. Further details of this seminar will follow in the next issue of our newsletter.
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