The United Arab Emirates oil and gas market is expected to register a CAGR of greater than 7.5%. Factors, such as massive investment in upstream and government policies, are likely to drive the United Arab Emirates oil and gas market during the forecast period. Moreover, in 2018, the country launched a mega project worth USD 45 billion, to increase its refining capacities. The project is expected to increase the refining capacity of the country by 65%, up to 1.5 million barrels per day by 2025. This investment in the upstream, midstream, and downstream sectors is expected to drive the United Arab Emirates oil and gas market during the forecast period. However, the Government of the United Arab Emirates is expected to shift investments from the oil and gas sector and increase the investments in alternative energy for domestic power consumption, which is likely to hinder the growth of the market during the forecast period.
- The oil and gas upstream sector is expected to dominate the market studied, owing to investment in discoveries in the region.
- The increasing demand for LNG in the country leads to the integration of smart technologies in the existing LNG infrastructure, which may create an ample amount of opportunities in the region for the market players in the coming years.
- Rising oil and gas investment, especially in the upstream and midstream sectors, is expected to drive the United Arab Emirates oil and gas market during the forecast period.
Key Market Trends
Upstream Sector is Expected to Dominate the Market
- The United Arab Emirates accounted for over 10% of the share in the Middle-East’s oil production, with 3.9 million barrels per day production, in 2018. It also has 11.5% of the region’s proved oil reserves.
- The country witnessed significant growth in terms of its upstream activities, during 2012-2014. The drop in crude oil prices, which began in mid-2014, has resulted in a decline of exploration and development activities, which negatively impacted the uptake of newer upstream projects. However, with the rise in oil prices, the government has decided to increase the uptake of new oil and gas projects in the upstream sector, both onshore and offshore.
- The United Arab Emirates’ reserves were 97.8 billion barrel (bbl) of oil and 5.9 trillion cubic meters (tcm) of natural gas, as of 2018. About 90% of the total reserves are located at Abu Dhabi, followed by Dubai, Sharjah, and Ras al-Khaimah. The majority of the acreage, both onshore and offshore, is relatively well explored, while the recent drilling has yielded a few significant discoveries.
- Moreover, in April 2018, the national oil company, ADNOC, as a part of Abu Dhabi’s first-ever block licensing strategy, offered six geographical oil and gas blocks for licensing. This is expected to supplement the uptake of newer oil and gas upstream projects in the country.
- Additionally, in a bid to counter the production from the maturing fields, the country plans to increase investments in the field expansion projects and the application of enhanced oil recovery (EOR) techniques.
- Hence, investments and policies for new oilfields are expected to be the biggest and the most dominating driver for the United Arab Emirates oil and gas market during the forecast period.
Rising Oil and Gas Investment is Expected to Drive the Market
- As of November 2019, the United Arab Emirates was the world’s sixth-largest crude oil producer and the fourth-largest producer of petroleum liquids in the Organization of the Petroleum Exporting Countries (OPEC). The oil and gas sector is critical to the United Arab Emirates economy, contributing as much as USD 65 billion (or ~20% of all export revenue) in 2018.
- The United Arab Emirates oil and gas sector has a significant infrastructure that helps the country trade its hydrocarbon to other parts of the world. Moreover, as part of its 2030 strategy of creating a more profitable petroleum sector, the country has formulated plans to significantly increase investments in the midstream and downstream sectors in the coming years.
- As part of its downstream expansion strategy, Abu Dhabi National Oil Company (ADNOC) announced its plans of investing approximately AED 165 billion (USD 45 billion) in the downstream sector.
- In addition, few recent projects, such as the newest export pipeline from Habshan to Fujairah of 220 miles, may help the United Arab Emirates directly link the rich field of its western desert to the Gulf of Oman, as conduct to the global market. The country also has the world’s largest bunkering port in Fujairah, which is expected to expand the terminal by the addition of private tank storage units, with a tentative capacity of around 88 million barrels by 2020, with the help of foreign investment.
- Furthermore, in September 2018, Adnoc LNG, a subsidiary of ADNOC, signed an AED 3.16 billion (USD 860 million) engineering, procurement, and construction (EPC) contract with a joint venture of Spanish and the United Arab Emirates companies for the second phase development of its Integrated Gas Development Expansion (IGD-E) project.
- Hence, making some of the major projects economically viable with the help of foreign investment, along with the government policies for investment, may drive the United Arab Emirates oil and gas market during the forecast period.
Competitive Landscape
The United Arab Emirates oil and gas market is moderately fragmented due to many companies operating in the industry. The key players in this market include Abu Dhabi National Oil Company (ADNOC), Exxon Mobil Corporation, Schlumberger Limited, Al Masaood Oil Industry Supplies & Service Co., and Halliburton Company.
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