UAE’s discovery of new oil resources will take the country’s total conventional oil reserves to 107 billion barrels, placing the OPEC nation near Russia. Picture for illustrative purposes only. Image Credit: Adnoc Group/ Instagram

Dubai: UAE’s discovery of new oil resources will take the country’s total conventional oil reserves to 107 billion barrels, placing the OPEC nation near Russia, one of the world’s largest energy exporters. The find “strengthens the country's position in sixth place in the world in the list of countries with the highest oil reserves,” the country’s energy regulator said in a statement.

On Sunday, UAE's Supreme Petroleum Council announced new discoveries of unconventional oil resources estimated at about 22 billion barrels of oil in addition to 2 billion barrels of conventional oil in Abu Dhabi.

The unconventional oil resources outnumber “some of Abu Dhabi's major fields in terms of resources” and the production potential can be compared to the largest shale oil operations in North America, the statement said.

Unconventional oil, crude that is extracted using complex methods such as horizontal boring and hydraulic fracturing (‘fracking’), has now become a new area of focus for ADNOC as it suffers from output declines at some of its older oilfields.

Earlier this month, ADNOC, which is looking to produce up to 5 million barrels of oil per day by 2030, announced the delivery of the first unconventional gas from UAE. The unconventional gas was delivered from the Ruwais Diyab Unconventional Gas Concession located 200 kilometres west of Abu Dhabi city.

Unconventional reserves

The latest discovery of large quantities of unconventional and recoverable oil resources shows the company’s “efficiency” in “accelerating the pace of exploration and development of Abu Dhabi’s unconventional hydrocarbon resources,” said Sultan bin Ahmed Al Jaber, Minister of Industry and Advanced Technology, CEO of ADNOC, in a statement on Sunday.

The council also approved ADNOC's plan to increase its capital investments to Dh448 billion for the next five years, which will enable the company to achieve “smart growth.” Through this plan, ADNOC intends to redirect Dh160 billion ($ 43.6 billion) to UAE’s economy during the period between 2021-2025 through its program.

Revenue boost

"It will increase not only ADNOC’s potential revenue base, but also support a long-term strategy to increase overall InCountry Value as it will need additional work and increase the technicial strength of the company at the same time, " said Cyril Widdershoven, an energy market expert and founder of Netherlands-based risk consultancy, Verocy.

The fact that the company is putting the discovery out in the market amid low oil prices and peak oil demand concerns shows that the overall costs and quality of the new discovery is "good enough" to play a big role in ADNOC's future strategy, said Widdershoven.

"It will attract new investments, and potentially new technology as the latter is needed to counter production and environmental issues in future, " he added.

Higher budget

The higher budget will be used for exploration, production and the petrochemicals sector. ADNOC is looking to develop the Ruwais Industrial Complex to become a global center for refining and petrochemical activities.

Oil and gas giants are looking to tap into the market for petrochemicals, used in everything from plastics to automobiles, to drive future revenue growth.

Oil discovery

During the ADIPEC oil and gas event, ADNOC’s CEO said that despite the recent drop in prices, long-term fundamentals of the oil industry still remained intact.

“We expect oil demand will grow to over 105 million barrels per day by 2030 and continue to supply over half the world's energy needs for many decades to come,” said Al Jaber during a keynote speech.

International crude prices have fallen by nearly a third this year as the COVID-19 pandemic brought global economy to a halt and erased fuel demand overnight.