Abu Dhabi will invest 448 billion dirhams ($122 billion) in oil and natural gas over the next five years as it seeks to raise production capacity, even while OPEC restricts its output.
The Gulf emirate’s top body for energy policy, the Supreme Petroleum Council, approved the budget for Abu Dhabi National Oil Co., the state-run WAM news agency reported on Sunday. The investment plan will contribute to growth and expansion “in all business areas,” including production, refining and trading, according to the statement.
Abu Dhabi, which already holds most of the crude oil in the United Arab Emirates, has discovered an additional 2 billion barrels at conventional fields, bringing the UAE’s total reserves of recoverable oil to 107 billion, WAM reported. The emirate has also found an extra 22 billion barrels of unconventional oil, which is harder to extract and may not all be recoverable.
Adnoc, the country’s biggest energy producer, is expanding “to achieve the maximum possible value from every barrel of oil produced, refined and sold,” according to the statement. State-owned Adnoc plans to raise daily oil-production capacity to 5 million barrels by 2030 from about 4 million barrels, yet OPEC has capped the UAE’s output to roughly 2.6 million barrels a day until the end of the year.
Officials in Abu Dhabi, the UAE’s capital, privately floated the idea last week that the nation could leave the Organization of Petroleum Exporting Countries, a highly unusual step that would probably destabilize oil markets. Energy Minister Suhail Al-Mazrouei later said the UAE “has always been a committed member,” though he didn’t address the country’s future in the cartel.
“The increase in the UAE’s conventional oil reserves sends a strong signal that Adnoc is leaving no stone unturned in unlocking value from our abundant hydrocarbon resources,” the company’s chief executive officer, Sultan Al Jaber, said in a separate statement from Adnoc.
The SPC increased Adnoc’s budget for the five years through 2025, according to the statement, which didn’t specify the previous spending allocation for 2019-24. In 2018, Adnoc said the SPC had earmarked 486 billion dirhams for investments from 2019-23, the last period for which the company provided the information.
The Abu Dhabi government also gave approval for Adnoc to develop hydrogen as a low-carbon source of energy and to award contracts for companies to explore onshore and offshore oil and gas blocks.
OPEC and allied producers such as Russia are set to meet next week to decide whether to increase output in January as part of a plan to ease cuts started in May at the height of the coronavirus pandemic. They may be forced to delay the hike as the virus continues to sap demand for energy and weigh on oil prices.