gas oil fuel drilling field
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Dubai: With the UAE announcing the biggest gas find anywhere since 2005, the next big question is - how soon can work start on the site in bringing it out?

This is where the nature of the gas find announced on Monday (February 3) assumes significance. The discovery is of “shallow gas”, which means less strenuous effort and costs are required to tap it.

273trillion cubic feet

of conventional gas reserves in the UAE (Abu Dhabi’s Supreme Petroleum Council (SPC))

“The “shallow” part is the gamechanger - if so, we are possibly looking at the first major EPC (engineering, procurement, construction) contracts being awarded at the project within 12 months,” said a senior manager with a leading contractor in the Gulf’s energy consultancy services space. “The costs would be better managed going forward, and this can prove crucial in finding export markets later, if that is the intent.

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“Adnoc, like Saudi Aramco, has one of the best cost efficiencies in the industry, and that expertise will be used to full effect in this project.”

It’s all in the scale

The sheer size of the discovery - set on an area of 5,000 square kilometres between Dubai and Dhabi - is what has got the industry excited. The Jebel Ali Project could be sitting on 80 trillion cubic feet of gas… and potentially making it the fourth biggest gas field in the wider Middle East region.

"Gas will have the biggest influence in the energy markets for the foreseeable future...."

- Sources to Gulf News

The reservoir is estimated to have 80 trillion cubic feet of gas resources. The last time such a major discovery happened was 15 years ago, when the Galkynysh field was found in Turkmenistan. That one is the world’s second-largest gas field.

Adnoc and Dubai Supply Authority will jointly develop the field, with the former having already dug in 10 wells.

“There had been a lot of talk about such a discovery in Dubai-Abu Dhabi for some time,” said the sources. “But to suddenly receive confirmation that this is the case is going to be a big bonus for the energy services industry.

160trillion cubic feet

of standard non-conventional gas reserves in the UAE (Abu Dhabi’s Supreme Petroleum Council (SPC))

“Gas will have the biggest influence in the energy markets for the foreseeable future - the new find gives Abu Dhabi and Dubai options on what it wants to do with future supplies from the field.”

As of now, the intent is to pass on future supplies to Dubai. Even if all of it is used for domestic purposes, it can easily cut down on the UAE's imports of the same.

Sharjah too makes a discovery

It was in late January that the Sharjah National Oil Corporation and Italy’s ENI revealed the discovery of natural gas and condensate onshore at the Mahani field in Sharjah. Flow rates would go up to 50 million standard cubic feet per day, according to the partners. This represents the first onshore discovery of gas in Sharjah in nearly four decades.

Much happening in the Gulf’s energy space
* It was in 2018 that Bahrain announced the discovery of a massive offshore reserve at Khalij al-Bahrain. It is estimated to hold more than 80 billion barrels of tight oil and 10-20 trillion cubic feet of tight gas

* On the Saudi-Kuwait border, a long simmering dispute was finally resolved last year. In December, the countries signed a new agreement to resume oil production in the “Neutral Zone”

Fortuitous finds - volatility, hot topics

That both recent announcements relate to gas finds is seen as a happy coincidence by the industry. There is more appetite in this space than would have been the case with oil, especially in the context of the volatility the commodity has been having in recent years since the 2014 highs.

Moreoever, with renewables and climate change being hot potato topics, it would have meant pumping in millions into new oil finds would be deemed as not being in sync with the times.

“Despite plans in many Gulf countries to diversify their economies, hydrocarbon and government activities (which are heavily funded by oil revenues) remain the major components of gross domestic product (GDP),” said Marsh, the insurer in its latest global risk assessment report.

“The end of 2018 and beginning of 2019 saw immense volatility in this sector, with the price of crude oil dropping by approximately 40 per cent in the fourth quarter and then rising sharply in early 2019.

"This volatility posed challenges for a number of GCC countries, particularly Bahrain (which ranked the issue number one) and Oman (which ranked the issue in second place). Dropping prices in hydrocarbons led to deflation in the region’s three largest economies - Saudi Arabia, the UAE and Qatar.

“Looking ahead, continued global trade tensions are putting downward pressure on oil prices, with the IMF forecasting that prices would remain lower for the next several years. At the same time, Egypt and Jordan also ranked the issue high (one and three, respectively) as both countries subsidize the price of fuel for their populations and are affected by large swings in the market.”

Cut down imports

But if the Jebel Ali Project allows UAE to reduce its dependence on gas imports, partially or even in full, the new discovery would have served its wider purpose.

Now, on any parameter, that’s a big plus for the UAE.