UAE Reports Major Gas Find: Update

(adds comments from Wood Mackenzie at end)

The UAE’s Abu Dhabi National Oil Co (Adnoc) announced on February 3 the discovery of a new 80 trillion-ft³ shallow gas accumulation.

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The find was made in a 5,000-km² area between Abu Dhabi and Dubai, where Adnoc has drilled over 10 exploration and appraisal wells, the company said in a statement. It has signed an agreement with the Dubai Supply Authority (Dusup) “to continue to explore and develop the shallow gas resources in this area in a joint project named ‘Jebel Ali’.” Its gas will be supplied to Dusup to improve Dubai’s energy security and support its economic growth.

"Adnoc will deploy capital, technology, and expertise to develop and produce shallow gas resources and conduct further exploration to assess further volumes and firm up development costs,” the company said. “As part of Adnoc's 2030 strategy, the company also plans to tap gas from its gas caps and substantial unconventional gas reserves, as well as new natural gas accumulations, which will continue to be appraised and developed as the company pursues its exploration activities.”

The UAE has almost 210 trillion ft³ of proven gas, according to BP data, and produced around 6.26bn ft³ in 2018. But it swung to being a net importer of gas in 2008 because of growing power demand and the increased use of gas in oil recovery. It receives supplies from Qatar via the Dolphin gas pipeline.

The Gulf state has scaled up exploration work in the hope of becoming self-sufficient in gas again and even producing enough supplies to support exports.

This marks the first time Adnoc has explored for oil and gas resources in the Dubai emirate. However, the latest find follows the discovery of gas and condensate in the Sharjah emirate late last month by the UAE’s Sharjah National Oil Corp. and Italy’s Eni. New unconventional resources were also found in the Abu Dhabi emirate last year.

Edinburgh-based consultancy Wood Mackenzie commented in a research note that the Dubai gas find was the world's largest since the Galkynysh discovery in Turkmenistan in 2005.

“The shallow nature of the find will mean that development costs will be much lower than some of Abu Dhabi’s sour gas resources,” WoodMac analyst Liam Yates said. “A discovery of this scale will be a clear priority for development, but the timing will be dependent on where it fits into the UAE’s gas market. Large volumes of gas are associated with oil production, which is on the rise.”

Adnoc has other priority gas projects such as the Hail and Ghasha development, and the UAE will need to honour its import contract with Qatar. 

“But longer term, the field is likely to play a pivotal role in the UAE’s gas market and could lead to additional gas exports from the country,” Yates concluded.