Abu Dhabi Oil Investment Plummets for Unprecedented First Time

August 24, 2010

Abu Dhabi recently reported that their government investment in its oil & natural gas industry decreased by more than 12% in 2009.  This is the first time in thirty years that Abu Dhabi has decreased their investment in oil & gas.

Abu Dhabi’s government, in an effort to expand their production, injected approximately US$2.5 billion in to the oil & gas industry in 2009.

In 2008, Abu Dhabi invested US$2.88 billion, 12.3% more than this year.

Industry analysts see this decrease is a result of lower crude prices and a reduction in global demand.

This decrease in government investment comes despite total investments in the Abu Dhabi economy rising from US$19.79 billion in 2008 to a record US$21.74 billion in 2009.  Oil & gas investments accounted for 11.5% of the total in 2009.

Despite 2009’s decrease in government spending within the energy sector, Abu Dhabi still maintains an effort to expand its crude production capacity, develop its gas sector, and create more oil & gas projects.

In 2008, investments were increasing by 24.7%, due to oil prices rising to a record high in July of 2008.  Prices and demand dropped drastically following the global financial crisis that hit in the markets in September of 2008.

Abu Dhabi’s oil & gas investment growth was 8% in 2007, and approximately 5.3% in 2006.

Abu Dhabi, the chief oil producer within the United Arab Emirates (UAE), is still proposing to increase its crude oil output to 3 million barrels per day (bpd) over the next 4 years.  Plans include raising output to 3.5 million bpd in the years after.

Abu Dhabi has injected over US$8 billion since 2005, into both its onshore and offshore oil projects, including its enormous offshore Upper Zakum oil field.  The government is still planning to invest US$1.5 billion in the Upper Zakum region in order to raise the area’s capacity from 200,000 bpd to 550,000 bpd.

There are also plans to inject US$1.5 billion into its huge Umm Shaif offshore field, and US$2 billion into the Nasr Field area, both operated by the Abu Dhabi Marine Oil Company. Abu Dhabi Marine Oil Company (ADMA-OPCO

The Abu Dhabi Onshore Oil Company Abu Dhabi Onshore Oil Company (ADCO) is one of the 10 largest oil companies in the world.  It is also investing US$1.5 billion into a program to increase its onshore production to 400,000 bpd.

All of these investment injections are part of the United Arab Emirate’s plan to expand its crude oil capacity, which was approximately 2.8 million bpd in December of 2009.

Abu Dhabi is reported to have almost 98.7 billion barrels of known oil reserves, which is more than 8% of the known oil capital within the world.

In 2009, the United Arab Emirate’s average oil output was approximately 2.3 million bpd, down from 2008’s production of 2.6 million bpd.  This drop is attributed to a collective OPEC agreement to reduce supplies in an effort to increase prices.