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All News » UAE Plans to Boost Output by 30% Through Development in Enhanced Oil Recovery (EOR)

UAE Plans to Boost Output by 30% Through Development in Enhanced Oil Recovery (EOR)

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The volatility of the oil market has occupied much space in the financial pages during the past year or so, and seasoned market analysts have struggled to predict upcoming price patterns and reach a consensus on how the fluctuations can best be contained. The constant through all of this has been the OPEC stance of protecting its own market share by continuing with high production levels and tolerating low prices until circumstances stabilise. Despite alarming economic conditions in those OPEC countries which depend for their wealth on oil, they have largely maintained this strategy, and several, including the United Arab Emirates (UAE), have announced their intention to channel significant resources into expanding production and developing enhanced techniques for oil extraction.

What Is the Backdrop to This Development?

OPEC, informed principally by Saudi Arabia, the organisation’s biggest producer, has opted during the price crisis to maintain high levels of production despite the view held in many quarters that overproduction is the underlying problem with the oil markets. Within OPEC, however, there are signs of emerging discontent with the Saudi approach. For example, Iran recently announced that it felt the focus should properly be on cutting production and increasing prices. There is certainly no sign that Saudi Arabia intends to soften its position, and it has recently reduced oil prices for Asian markets in an attempt to stimulate sales and ignite the sluggish Chinese economy. Saudi’s Oil Minister, Ali Al-Naimi, has stated that his country intends to invest huge resources into oil production, oil technology and renewables, arguing that this was motivated more by a concern for future production than by current events. “We need to do the right thing,” he concluded. The UAE has now stated its intention of investing in Enhanced Oil Recovery (EOR) technologies.

What Are the Key Features of the UAE Proposals?

The government of the UAE plans to expand production 30% by 2020 using EOR techniques. It was the world’s sixth-largest oil producer in 2014 and the second-largest producer of petroleum within OPEC. There are unlikely to be new discoveries of oil in the UAE, however, and it must depend on EOR techniques in mature oil fields to maintain and even increase production.

As an example, the Upper Zakum oilfield has been identified as a key target for development, and the ambition is to expand production to 750,000 barrels per day by 2016. Production from the Lower Zakum field is also projected to increase to 425,000 barrels per day.

Similarly, despite producing 1.9 trillion cubic feet of natural gas in 2013, it remains a net importer because much of its gas production has been used in oil fields as part of EOR techniques. Likewise, the country’s growing electricity grid relies on electricity from natural-gas-fired facilities. To help accommodate domestic demand for natural gas, the UAE has increased imports from Qatar and plans to increase production. Its natural gas, though, has a high sulphur content, making development of its reserves problematic and expensive, but advanced technologies have recently made the UAE’s reserves a viable alternative to imports, and it has undertaken numerous projects which will increase the country’s production in coming years.

The UAE has also reiterated its intention to expand non-oil energy assets in an attempt to reduce its dependence on natural gas.

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