United Arab Emirates - Commercial Guide
Oil and Gas Field Machinery and Services

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2020-09-12

Overview

The United Arab Emirates (UAE) is an important strategic player in global energy markets. As of 2019, the UAE is:

  • A top-10 global crude oil producer.
  • Member of the Organization of the Petroleum Exporting Countries (OPEC) and the Gas Exporting Countries Forum (GECF).
  • Major oil producer and exporter, producing an average of 4 million barrels per day (bpd) of petroleum and other liquids, with reserves of nearly 100 billion barrels of crude.
  • The seventh largest natural gas reserves globally.

Current reforms are under way in this sector, including:

  • Pressing ahead with programs to raise crude oil production capacity to 5 million bpd by 2030.
  • Seeking self-sufficiency in gas production.
  • Significant expansion of refining and petrochemical operations.

This expanded production provides opportunities for U.S. firms across a wide range of technologies, equipment, machinery, and services. The UAE has served as a base for international oil companies, and always encouraged foreign investment into its oil and gas exploration and production sectors. U.S. oil and gas companies are strategically positioned as preferred suppliers and contractors for the UAE, though they should expect tough competition from Asian, European, and local firms.

Individual emirates control their own oil and gas production and resource development. According to the UAE State of Energy Report 2019, UAE has an estimated 98 billion barrels of oil reserves, of which:

  • Abu Dhabi holds 94%, controlled by the state-owned Abu Dhabi National Oil Company (ADNOC).
  • Dubai holds 4% (about 4 billion barrels).
  • Sharjah holds 1.5% (about 1.5 billion barrels).
  • Ras Al Khaima holds 0.5% (about 500 million barrels).

In Abu Dhabi, the Supreme Petroleum Council (SPC) establishes the Emirate’s petroleum-related objectives and policies. Abu Dhabi is the central key player in the UAE oil industry. Operating under mandate from the SPC, ADNOC laid out its 2030 Strategy at the end of 2016, setting new goals to include:

  • More profitable upstream.
  • More valuable downstream.
  • More sustainable and economic gas supply.
  • More proactive and adaptive marketing.

Its 2030 strategy included the unification of ADNOC’s brand, bringing together its 14 subsidiary companies under one common identity, the ADNOC Group. Two of ADNOC’s largest operating companies are ADNOC Onshore and ADNOC Offshore, which together account for most the UAE’s crude and gas production.

ADNOC Companies:

Exploration & Production

Process & Refining

Marketing & Distribution

• ADNOC Onshore

• ADNOC Gas Processing

• ADNOC Distribution

• ADNOC Offshore

• ADNOC Sour Gas

• ADNOC Logistics and Services

• ADNOC Drilling

• ADNOC LNG

• ADCOP

• Al Yasat Petroleum

• ADNOC Refining

 

• Al Dhafra Petroleum

• ADNOC Fertiglobe

 

 

• ADNOC Industrial Gas

 

 

• Abu Dhabi Polymers Company (Borouge)

 

Hydrocarbon production remains critical to the UAE economy and is projected to reach $72 billion, approximately 25% of all export revenue, according to the U.S. Energy Information Administration (EIA). In November 2019, the SCP announced the discovery of new hydrocarbon reserves estimated at 7 billion barrels of crude oil and 58 trillion standard cubic feet of conventional gas. On March 11, 2020, ADNOC stated that it was on track to increase supply to over 4 million bpd by the beginning of the second quarter of 2020, after reaching 4.1 million bpd in April 2020.

As a member of OPEC, the UAE coordinates its production levels with OPEC members to support price stability. In March 2020, OPEC member countries collaborated in an effort to achieve and sustain oil market stability. In April 2020, OPEC+ meetings were held to discuss market stability and price supports. As a reliable supplier, and in line with the OPEC+ agreement, the UAE committed to reducing production from 4.1 million bpd in April 2020, according to the UAE Minister of Energy and Industry.

Although the UAE plans to boost production and expand development of domestic natural gas reserves, most of the UAE's gas has a relatively high sulfur content (described as sour), which makes the development and processing of the country's vast reserves economically challenging. Consequently, nearly 30% of the UAE's gross production is re-injected into oil fields as part of the nation’s enhanced oil recovery (EOR) techniques.

In February 2020, Abu Dhabi and Dubai announced that they will jointly develop a gas reservoir, called “Jebel Ali Project” to support the UAE economy and ensure sustainable growth. The venture brings together ADNOC and Dubai Supply Authority (Dusup). The Jebel Ali reservoir located between the two emirates will have 80 trillion cubic feet of gas resources once the development reaches full speed. This new discovery is the fourth largest in the world, according to Bloomberg.

Dubai and the Emirates National Oil Company (ENOC) have plans to expand refining capacity from 140,000 bpd to 210,000 bpd, and expand production of jet fuel, gasoline and diesel.

Fujairah plays a role with infrastructure. Though the emirate has no oil or gas deposits of its own, it is expanding its storage capabilities and has become one of the world’s largest fuel bunkering ports and a major storage and trading hub.

In 2018, ADNOC introduced the In-Country Value (ICV) program, which will increase the company’s contribution to the continued development of the UAE economy and strengthen its relationship with the UAE’s private sector. All business partnerships with ADNOC now include an ICV assessment integrated into the tender evaluation and award process. The benefits include:

  • Encouraging private sector partnerships.
  • Improving knowledge transfer.
  • Creating employment opportunities for Emiratis.
  • Localizing critical parts of the supply chain using local products, manufacturing and assembly facilities, services, and infrastructure.

Companies without ICV certification are still permitted to participate in tenders but may be disadvantaged. To learn more about this initiative, see ADNOC’s ICV program.

Opportunities

The International Trade Administration’s (ITA) 2017 Upstream Oil and Gas Equipment Top Markets Report ranked the UAE as number twelve among the top thirty markets based on export potential for U.S. oil and gas equipment. As costs of exploitation rise, technologies that improve yield and drive costs down will be particularly attractive.

  • Several mechanisms are being implemented to promote the development of artificial intelligence (AI) applications across this vital industry. AI is also playing an important role in the transformation of ADNOC where the oil and gas producer is exploring how AI can help enhance efficiencies, improve agility, stimulate growth, and drive performance. In November 2017, the company launched the Panorama Digital Command Center and the Thamama Subsurface Collaboration Center to utilize big data and AI to help extract maximum value from its assets and resources.
  • In June 2020, ADNOC announced the intention to sell a 49% stake in its natural gas pipelines assets business, valued at $20.7 billion, to a consortium of investors and sovereign wealth and pension funds.
  • In November 2019, ADNOC signed a framework agreement with eight contractors for the provision of project management consultancy (PMC) services for its group-wide projects. ADNOC intended to form a pool of consultants comprising prequalified companies, from which it would hire firms to manage all the projects it tenders in future. The firms that have secured framework PMC agreements with ADNOC are:
    • Fluor (U.S.)
    • KBR (U.S.)
    • SNC-Lavalin (Canada)
    • Wood Group (UK)
    • Penspen (UK)
    • Mott Macdonald (UK)
    • TechnipFMC (France)
    • Worley (Australia)
  • In February 2019, ADNOC entered into a $4 billion agreement with U.S. investment firms BlackRock and KKR to boost pipeline infrastructure for transport of crude oil and condensate in the UAE.
  • In February 2019, ADNOC announced an agreement awarding an onshore block to Occidental Petroleum. Under the terms of the agreement, Occidental will hold a 100% stake in the exploration phase, investing as much as $244 million (AED 893 million) to explore for oil and gas in this block. Upon successful exploration, Occidental will be granted the opportunity to negotiate production terms.

Leading Sub-Sectors

Although the global average for oil recovery stands at about 35%, ADNOC is looking to increase recovery rates to 70% at its fields. Given this, there are excellent prospects for U.S. firms that offer:

  • New enhanced oil recovery (EOR) technologies that will help lower operational expenditure and extend the lifespan of producing fields.
  • Advanced technologies that provide alternatives to using gas to maintain oil well pressure.
  • Technologies for more economical development of sour gas fields.
  • Drilling equipment and chemicals.
  • Natural gas processing facilities to meet growing domestic electricity demand.

Resources

Trade Shows and Exhibitions

Abu Dhabi International Petroleum Exhibition & Conference (ADIPEC 2020)
Date: November 9-12, 2020
Venue: Abu Dhabi National Exhibition Center - ADNEC (virtual)

Key Websites

Abu Dhabi International petroleum Exhibition & Conference
Middle East Business Intelligence (MEED)
Organization of the Petroleum Exporting Countries

U.S. Department of Commerce - International Trade Administration
U.S. Energy Information Administration