The United Arab Emirates is one of the 10 largest oil and natural gas producers in the world, and is a member of the Organization of the Petroleum Exporting Countries (OPEC) and the Gas Exporting Countries Forum (GECF).
Since declaring independence from the United Kingdom in 1971, the United Arab Emirates (UAE)—a federation of the seven emirates of Abu Dhabi, Ajman, Al Fujayrah, Dubai, Ras al Khaymah, Sharjah, and Umm al Qaywayn—has relied on its large oil and natural gas resources to support its economy. In 2012, hydrocarbon export revenues were $118 billion according to the International Monetary Fund (IMF), up from approximately $75 billion in 2010. Overall, the hydrocarbon economy accounts for approximately 80% of government revenues and more than half of the country’s goods exports.
Beyond the hydrocarbon economy, the UAE is becoming one of the world’s most important financial centers and a major trading center in the Middle East. Investments in non-energy sectors, such as infrastructure and technology, continue to provide the UAE with insurance against oil price declines and global economic stagnation. Recovering oil prices and robust trade growth have buoyed the UAE’s economy, and International Monetary Fund (IMF) data indicate their GDP grew by 4.3% in 2012.
A member of the Organization of the Petroleum Exporting Countries (OPEC) since 1967—when Abu Dhabi joined—the UAE is one of the most significant oil producers in the world. The likelihood of further major oil discoveries is low, but the UAE uses enhanced oil recovery (EOR) techniques to increase the extraction rates of the country’s mature oil fields. Continued higher oil prices will help increase the commercial viability of EOR.
Natural gas use in the UAE is rising. While the country is a member of the Gas Exporting Countries Forum (GECF), domestic demand is likely to draw heavily on the UAE’s potentially-exportable natural gas resources. Presently, the country both imports and exports liquefied natural gas (LNG) and shares international natural gas pipelines with Qatar and Oman. The UAE is also one of the world’s leaders in the use of natural gas in EOR techniques, but with natural gas demand rising, the government plans to expand into other EOR techniques to divert the gas volumes for domestic consumption.
The UAE is making notable progress in diversifying its economy through tourism, trade, and manufacturing. However, in the near term, oil, natural gas, and associated industries will continue to account for the majority of economic activity in the seven emirates.
|Oil (million barrels)|
|Proved reserves, 2013||Total oil supply (thousand bbl/d), 2012||Total petroleum consumption, 2012||Reserves-to-production ratio|
|Natural Gas (billion cubic feet)|
|Proved reserves, 2013||Dry natural gas production, 2012||Dry natural gas consumption, 2012||Reserves-to-production ratio|
|Generating capacity, 2011 (gigawatts)||Electricity generation, 2011 (billion kilowatthours)||Electricity consumption, 2011 (billion kilowatthours)||Distribution losses, 2011 (billion kilowatthours)|
|Source: U.S. Energy Information Administration|
Each of the seven emirates is responsible for regulating the oil industry within their borders, creating a mix of production-sharing arrangements and service contracts. In Abu Dhabi, the Supreme Petroleum Council (SPC) sets Abu Dhabi’s petroleum-related objectives and policies. Given Abu Dhabi’s status as the central player in the UAE’s oil industry, the SPC is the most important entity in the country when it comes to establishing oil policy.
The Abu Dhabi National Oil Company (ADNOC)—which operates 15 subsidiaries throughout the oil, gas, and petrochemical sector—leads the day-to-day operations and implementation of SPC directives, and is the key shareholder in nearly all upstream activity in Abu Dhabi. ADNOC’s subsidiaries engage in oil and gas exploration, processing, and distribution, among other activities. Some of the most notable subsidiaries are the Abu Dhabi Company for Onshore Oil Operations (ADCO), the Abu Dhabi Marine Operating Company (ADMA-OPCO), the Zakum Development Company (ZADCO), and the Abu Dhabi National Tanker Company (ADNATCO), which operates under the same management team as the National Gas Shipping Company (NGSCO).
The Dubai Supreme Council of Energy (DSCE) oversees Dubai’s energy-policy development and coordination. The DSCE includes representatives from several key entities, including the Emirates National Oil Company (ENOC), the Dubai Petroleum Establishment (DPE), and the Dubai Nuclear Energy Committee (DNEC). The DSCE seeks to ensure that Dubai’s economy has adequate and sustainable access to energy resources.
The other Emirates have small oil and natural gas sectors, but details on their structures are limited.
Natural gas production and regulation also falls to the individual Emirates and is often carried out under the same leadership as their oil sectors. ADNOC leads Abu Dhabi’s natural gas sector through its subsidiaries, with the exploration and production of gas resources carried out by ADCO and ADMA-OPCO, as in the case of oil. The Abu Dhabi Gas Industries Limited Company (GASCO), created as a joint venture between ADNOC, Shell, Total, and Partex, oversees processing Abu Dhabi’s onshore natural gas, as well as the associated gas recovered from onshore oil operations. Another important company in Abu Dhabi’s natural gas sector is Abu Dhabi Gas Liquefaction Limited (ADGAS), which controls the production and export of Abu Dhabi’s liquefied natural gas (LNG) and liquefied petroleum gas (LPG). The third major participant in Abu Dhabi’s gas industry is the Abu Dhabi Gas Development Company Limited (Al Hosn Gas), which is responsible for the development of the sour-gas reservoirs in the Emirate’s large Shah field. Al Hosn Gas is a joint venture between ADNOC (60%) and Occidental Petroleum Company (40%).
The DSCE is also the central figure in Dubai’s natural gas sector. Led by the ENOC group—a state-owned entity made up of dozens of subsidiaries—Dubai’s natural gas sector operates similarly to its counterpart in Abu Dhabi. The Dubai Natural Gas Company Limited (DUGAS) oversees engineering, construction, management, and operation of Dubai’s natural gas infrastructure.
ContractsAbu Dhabi bases contract structures on long-term, production-sharing agreements (PSAs) between state-run ADNOC and private actors (primarily large international oil companies) with the state holding a majority share in all projects. With the exceptions of Dubai and Sharjah—which have service contracts to manage their declining reserves—the smaller Emirates all use PSAs similar to those found in Abu Dhabi.
Major international oil companies involved in the oil and gas sector in the UAE include BP, Shell, Total, ExxonMobil, and Occidental Petroleum—which in 2008 secured the first new concession offered by the UAE in more than 20 years. International oil companies involved in UAE’s upstream oil sector receive just $1 per barrel produced under the decades-old ADCO concession. With two existing concessions expiring in January 2014 and in 2018, respectively, production terms may change in the next few years.
The United Arab Emirates is a major oil producer and exporter. In 2012, the country produced an average of 2.8 million barrels of crude oil per day, the eighth highest total in the world.
According to Oil & Gas Journal estimates, the UAE holds the seventh-largest proved reserves of oil in the world at 97.8 billion barrels, with the majority of reserves located in Abu Dhabi (approximately 94% of the UAE’s total). The other six Emirates combined account for just 6% of the UAE’s crude oil reserves, led by Dubai with approximately 4 billion barrels. The UAE holds approximately 6% of the world’s proved oil reserves.
Recent exploration in the UAE has not yielded any significant discoveries of crude oil. What the UAE lacks in new discoveries it makes up for with an emphasis on EOR techniques designed to extend the lifespan of the Emirates’ existing oil fields. By improving the recovery rates at the existing fields, such techniques helped the UAE to nearly double the proved reserves in Abu Dhabi over the past decade.
The UAE has several crude streams, including the Murban—a light (API gravity i of 40.5°) and sweet (low sulfur) crude that is the country’s primary export stream. In April 2014, Abu Dhabi plans to offer a new crude stream called Das, which is a blend of two existing streams—the Umm Shaif and Lower Zakum crude streams—which will have an average gravity of 39° API. ADNOC currently produces just 350,000 bbl/d of the Umm Shaif and 280,000 bbl/d of the Zakum crude. Other streams include the Dubai and Zakum streams, which are also light and sweet crudes.
State-owned ADNOC controls the majority of UAE’s oil resources in partnership with a few large international oil companies under long-term concessions. The impending expiration of two existing concession licenses—including the ADCO concession, which currently accounts for more than 40% of the UAE’s crude oil production—could create opportunities for new entrants into the UAE’s energy sector. The SPC rejected a one-year extension of the concession in May 2013, and ADNOC appears willing to operate independently until the government approves a new consortia. Current stakeholders in ADCO are ADNOC (60%), BP, Exxon, Royal Dutch Shell, and Total, each with a 9.5% stake, and Partex with a 2% stake.
|United Arab Emirates||97.8|
|Source: U.S. Energy Information Administration, Oil & Gas Journal|
Exploration and production
The United Arab Emirates appears unlikely to meet a 3-million-barrel-per-day crude oil production target by the end of 2013. Further, the country may push back a longer-term 3.5 million barrel per day target until the end of the decade.
The ADNOC-led consortia continue to keep the UAE near the top of the list of the world’s largest crude oil producers, ranking eighth in 2012 at 2.8 million barrels per day (bbl/d), just behind Iraq. Based on recent reports, the goal to boost UAE’s crude oil production to 3 million bbl/d by the end of 2013 does not seem attainable, and the country appears poised to push back its longer-term 3.5 million bbl/d target until 2019 or 2020. With limited prospects for major discoveries, production increases in the UAE will come almost exclusively from the use of EOR techniques in Abu Dhabi’s existing oil fields.
One region that may help the UAE boost production is the Zakum petroleum system, which IHS reports may contain over 65 billion barrels of recoverable oil. ZADCO—owned by ADNOC (60% share), ExxonMobil (28%), and the Japan Oil Development Company (JODCO; 12%)—manages production from UAE’s Upper Zakum field, which currently produces about 550,000 bbl/d. In July 2012, ZADCO awarded an $800-million engineering, procurement, and construction contract to Abu Dhabi’s National Petroleum Construction Company—along with French firm Technip—with the goal of expanding production to 750,000 bbl/d by 2016. Production from the Lower Zakum field—operated by the Abu Dhabi Marine Operating Company (ADMA-OPCO)—should also increase, with production eventually reaching 425,000 bbl/d, increasing from the 300,000 bbl/d it currently produces.
ADCO—which oversees onshore operations in the Emirate—plans to increase production in the Bu Hasa, Bab, and SAS fields over the coming years, with increases expected to approach 200,000 bbl/d as soon as 2014. Smaller offshore fields like the Nasr, Umm Lulu, and Umm Shaif are also the targets of increased investments. ADMA-OPCO is seeking to boost production levels at the Umm Shaif field to 280,000 bbl/d and is attempting to bring the combined production of the Nasr and Umm Lulu fields up to 170,000 bbl/d as soon as 2018. In June 2013, ADMA-OPCO awarded a contract for full field development at the Umm Lulu field. ADMA-OPCO also hopes to significantly increase recovery rates at its fields, where the average rate is currently around 35%, according to industry sources. Exploration and production in the other Emirates is limited, with reserves nearly exhausted and the cost of recovery continuing to climb.
|Bu Hasa||550,000||200,000 (2014)|
|Sahil, Asab, and Shah (SAS)||430,000|
|Bida al-Qemzan||225,000||75,000 (2016)|
|Upper Zakum||500,000||250,000 (2016)|
|Lower Zakum||300,000||125,000 (TBD)|
|Umm Shaif||230,000||50,000 (2018)|
|Al-Dabbiya, Rumaitha, and Shanayel||100,000||none reported|
|Source: U.S. Energy Information Administration, IHS Global Insight, IHS EDIN, company reports, trade press|
Imports, exports, and consumption
The United Arab Emirates has one of the highest rates of per capita petroleum consumption in the world.
The UAE is both a major exporter and consumer of petroleum and petroleum products. The U.S. Energy Information Administration (EIA) estimates that the UAE exported more than 2.5 million bbl/d of crude oil in 2012, with the vast majority going to markets in Asia. In addition to being a major global petroleum exporter, the UAE domestic market relies heavily on petroleum and petroleum products to meet energy demand. Most of the UAE’s petroleum imports are of residual fuel oil, with limited imports of motor gasoline and diesel fuel. In 2011, the UAE had the seventh-highest per capita petroleum consumption in the world, and the country consumed nearly 620,000 bbl/d in 2012.
The UAE has a well-developed domestic pipeline network that links oil fields with processing plants and export terminals. The newest export pipeline, the Abu Dhabi Crude Oil Pipeline (ADCOP), runs 230 miles from Habshan to Fujairah and began operations in June 2012. This pipeline gives the UAE a direct link from the rich fields of its western desert to the Gulf of Oman, and from there to global markets. With a capacity of 1.5 million bbl/d—and expectations that the capacity will reach 1.8 million bbl/d in the near future—this pipeline will provide the UAE with the ability to export a significant portion of its daily production without passing through the Strait of Hormuz, the world’s busiest energy chokepoint. In 2011, 17 million bbl/d of crude oil passed through the Strait of Hormuz, which was almost 20% of the world’s traded oil and 35% of all seaborne-traded oil. The International Petroleum Investment Company (IPIC)—owned by the government of Abu Dhabi—led the pipeline project, and ADCO manages its operation.
Already one of the world’s largest bunkering ports, the export terminal in Fujairah will expand its capabilities significantly over the coming years. Plans to expand the terminal include three new subsea loading lines, an intermediate pumping station, and three offshore buoys designed for deepwater tanker loading. A planned 250,000-bbl/d refinery will provide fuel for both domestic and export markets. With growing storage capacity as a result of a number of ongoing expansion projects, Fujairah is quickly becoming a critical node in a well-developed export network.
|Export terminal||Products||Source (Field)|
|Jebel Dhana||crude oil||Asab, Bab, Bu Hasa, Murban, Sahil Shah|
|Zirku Island||crude oil||Upper Zakum, Umm al-Dakh, Satah|
|Das Island||crude oil||Lower Zakum, Umm Shaif|
|Ruwais||petrochemicals, jet fuel, gas oil||N/A|
|Umm al-Nar||crude oil, refined products||Bab|
|Fujairah||crude oil, petrochemicals, refined products||Habshan|
|Jebel Ali||crude oil, liquefied petroleum gas (LPG), refined products||Fateh, Southwest Fateh, Falah, Rashid|
|Source: U.S. Energy Information Administration, IHS Global Insight, trade press, company reports|
The UAE has five refining facilities, the largest of which are the Ruwais (400,000 bbl/d) and Jebel Ali (120,000 bbl/d) refineries. According to the Oil & Gas Journal, total refining capacity in the UAE reached more than 770,000 bbl/d by the end of 2012, an increase of approximately 150,000 bbl/d over the 2011 total. IPIC plans to invest $3 billion on a new Fujairah refining complex, with a targeted capacity of 250,000 bbl/d. Once completed, the new refinery will be the second largest in the Emirates behind the facility in Ruwais. Takreer, which is ADNOC’s refining subsidiary, plans to expand the refinery at Ruwais by 400,000 bbl/d by mid-2014. ENOC announced plans in June 2012 to boost the refining capacity of the Jebel Ali refinery off the coast of Dubai by 20,000 bbl/d as part of a larger port-expansion project.
The UAE and neighboring Oman plan to build a jointly-operated refinery that would have a capacity exceeding 200,000 bbl/d, and the DSCE signed a memorandum of understanding (MOU) with China Sonangol to build a refinery in Dubai. No details on the size of the proposed facility were available as of November 2013.
|Source: U.S. Energy Information Administration|
|Virgin Islands, U.S.||476|
|United Arab Emirates||44|
|Source: U.S. Energy Information Administration, International Energy Statistics|
The United Arab Emirates plans to boost domestic natural gas production over the next several years to help meet growing internal demand. Much of the growth could come from the country’s large sour (high sulfur) gas deposits.
The UAE holds the seventh-largest proved reserves of natural gas in the world, at just over 215 trillion cubic feet (Tcf). Despite its large endowment, the UAE became a net importer of natural gas in 2008. This phenomenon is a product of two things: (1) the UAE reinjected approximately 26% of gross natural gas production from 2003 to 2012 into its oil fields as part of EOR techniques, and (2) the country’s inefficient and rapidly-expanding electricity grid—already taxed by the swift economic and demographic growth of recent decades—relies on electricity from natural gas-fired facilities.
To help meet the growing demand for natural gas, the UAE boosted imports from neighboring Qatar via the Dolphin Gas Project’s pipeline over the past several years. The pipeline runs from Qatar to Oman via the UAE and is one of the principal points of entry for the UAE’s natural gas imports. In addition to the imports from Qatar, Dubai and Abu Dhabi both engage in LNG trading; the former as an importer and the latter as an exporter. The UAE is a member of the Gas Exporting Countries Forum (GECF).
The UAE’s natural gas has a relatively high sulfur content that makes it highly corrosive and difficult to process. For decades, the country simply flared the gas from its oil fields rather than undertake the extensive—and expensive—processes associated with separating the sulfur from the gas. The technical difficulties of producing the country’s sulfur-rich (sour) gas once posed a great impediment to the development of the UAE’s reserves, but advances in technology and the growing domestic demand for natural gas make the country’s vast reserves an enticing alternative to Qatari imports.
|Country||Trillion cubic feet|
|United Arab Emirates||215|
Source: U.S. Energy Information Administration, International Energy Statistics
Exploration and production
Already a top-20 global natural gas producer, the UAE has several ongoing projects that could boost the country’s natural gas production significantly over the next several years.
Dry natural gas production in the UAE rose to nearly 1.9 Tcf in 2012, continuing the upward trend that began in the 1980s. Dry production grew steadily by an annual average rate of 1.6% between 2003 and 2012. The UAE’s dry natural gas production ranks the country in the top-20 globally for 2012, based on EIA estimates. Despite the challenges of producing natural gas domestically, the UAE hopes to further boost production to help meet the country’s growing demand, which increased at an annual average rate of nearly 5.3% between 2003 and 2012.
Several recent and ongoing projects—the Onshore Gas Development (OGD), Integrated Gas Development (IGD), and Offshore Associated Gas (OAG) projects—may increase production of the country’s reserves, and could help meet the rapidly growing demand for natural gas in the country. OGD phases one and two expanded associated gas production at the Asab and Sahil fields to help increase reservoir pressure in the oil fields, with the Asab field dry production reaching 800 million cubic feet per day (MMcf/d), and 6.4 MMcf/d of natural gas liquids (NGL). Phase three of the project—completed in 2008—brought production of the Bab field gas to 1.2 billion cubic feet per day (Bcf/d). Abu Dhabi reportedly plans to boost production from the Bab field to more than 2 Bcf/d by 2015 and to nearly 2.5 Bcf/d by 2018. In April 2013, ADNOC selected Shell to develop Bab’s natural gas resources under a 30-year joint venture agreement. The Bab field is an important part of the UAE’s carbon dioxide (CO2) EOR plans. ADCO aims to receive 800,000 tons of CO2 per year from a nearby steel plant for reinjection to aid in oil recovery.
The IGD project—led by GASCO, ADGAS, and ADNOC, in collaboration with Shell, Total, and Partex—is developing the new Habshan-5 facility that will process associated gas from the Umm Shaif field and sour gas from nearby fields. Habshan-5 could process 1 Bcf/d of onshore gas and sour-gas from nearby fields in addition to 1 Bcf/d of offshore gas from Umm Shaif. The Habshan facility will eventually have five gas processing trains and a capacity of 7 Bcf/d, and the ability to process nearly 125,000 bbl/d of natural gas liquids (NGLs). The $10 billion IGD project includes plans for a 1 Bcf/d pipeline to bring non-associated gas from Khuff reservoirs beneath Umm Shaif and Abu al-Bukhoosh oil fields to the Habshan gas complex. Habshan’s units 1-4 can currently provide approximately 2.4 Bcf/d of natural gas for reinjection and 1.3 Bcf/d of marketable natural gas. The Habshan-5 facility should be operational by the end of 2013.
Another major project in the UAE’s natural gas sector is the Offshore Associated Gas(OAG) project, which began in 2010 as part of the larger IGD project. Two new gas processing plants on Das Island—with a combined capacity of 200 MMcf/d of associated gas—and a 30-inch subsea pipeline will provide additional volumes to the Habshan facilities for processing, and eventual consumption, in the Emirates.
Despite the technical challenges of processing UAE’s natural gas, ADNOC is pursuing a large-scale sour-gas development at the Shah field. One of the difficulties of the project is that production of the ultra-sour gas yields relatively small quantities of marketable gas; in this case, just 540 cubic feet per 1,000 cubic feet produced, even after extensive treatment. ADNOC brought Occidental Petroleum on board, and in early 2013 the Al-Hosn joint venture announced that the Shah sour gas development should be operational in 2014. The Al-Hosn joint venture partners are ADNOC (60%) and Occidental (40%). The Shah gas field production is expected to be 540 MMcf/d of dry natural gas (from 1 Bcf of gross production) and 50,000 bbl/d of NGL at full capacity in 2015.
The project to develop the ultra-sour gas of the Shah field initially went to tender with the Bab field, but after a tepid response from potential partners, the two fields went to tender separately. ADNOC still plans to develop the sour gas of the Bab field, but not until 2015, so that experiences from the Shah development can be applied to the project at Bab. Royal Dutch Shell will develop the sour gas from the Bab field.
Beyond the Shah development, ADNOC is working with U.S.-based Occidental Petroleum on new developments at the Jarn Yaphour and Ramhan fields. That concession was the first in Abu Dhabi in nearly 50 years and could produce more than 100 Mcf of natural gas per day. Exploration in the emirates of Sharjah, Ras al-Khaimah, Fujairah, and Umm al-Qawain is ramping up, but there have not been any significant discoveries to date. Production from the Zorah field (between Umm al-Qawain and Ajman) and in Sharjah could reach 300 MMcf/d in the near future, but only limited details on those projects are available. In late 2012, Dana Gas announced it would develop the Western Offshore Concession, which includes the Zorah field.
Imports, exports, and consumption
The United Arab Emirates was the first country in the Middle East to export liquefied natural gas (LNG), and has exported more than 250 billion cubic feet of LNG annually, almost exclusively to Asia.
Despite steadily increasing production, the UAE became a net importer of natural gas in 2008. Consumption in the UAE grew by an average of more than 5% per year between 2003 and 2012, which was only partially met by domestic production. Natural gas imports grew from just 7 Bcf in 2003 to 662 Bcf in 2012, while exports remained relatively flat through the entire period, rising by just 30 Bcf over the same period.
ImportsMost of the UAE natural gas imports come from Qatar, sent via the Dolphin Energy pipeline project. The Dolphin project was the first major interstate project of its kind in the Gulf, sending Qatari gas from its vast North Field to the UAE and Oman. The pipeline runs from Qatar to Abu Dhabi’s Taweelah power stations via a 226-mile subsea pipeline, and from there to the other Emirates and Oman. Dolphin Energy Limited, a group composed of the Mubadala Development Company from Abu Dhabi (51%), Total (24.5%), and Occidental Petroleum (24.5%), leads the project. The pipeline imports help free up Abu Dhabi’s natural gas for oil recovery and exports, levels which the Emirate must meet under its 30-year contract, that began in 2007. The pipeline supplies all seven Emirates and meets roughly 30% of the country’s natural gas demand. In 2010, Dolphin Energy completed the 152-mile Taweelah-Fujairah section of the pipeline, enabling the delivery of natural gas to two power stations in Fujairah. The UAE also imports LNG at a terminal off the coast of Dubai, Golar LNG. The first shipments to the facility arrived in late 2010.
In early 2013, Emirates LNG signed an agreement with the government of Fujairah to construct an LNG import facility in the Emirate. The facility, initially a floating storage and regasification unit (FSRU), should eventually be able to import up to 9 million tons of LNG per year (approximately 43 Bcf per year), and should be able to provide roughly 600 MMcf/d to domestic consumers with potential for expansion to 1.2 Bcf/d. The FSRU should be operational in late 2014, with an onshore facility ready to begin operations in mid-2015. Importantly, its location in the Gulf of Oman ensures that the country could still receive LNG shipments if the Strait of Hormuz were impassable for any reason.
The UAE and Iran have held discussions on natural gas trade between the two countries on a number of occasions. There were plans to send nearly 18 Bcf/d of Iranian natural gas to the Emirate of Sharjah, but Iran has not completed the infrastructure build-out on its side of the shared maritime boundary. Another plan by Iran—to turn Sirri Island in the Gulf into a major gas hub—could also provide additional natural gas volumes to the UAE. Sirri Island is already connected to the Kish and Qeshm islands, but Iran plans to link it to Abu Musa Island as well. This development could be significant because Abu Musa is one of the three islands whose legal status is contested by Iran and the UAE (the other two are the Greater Tunb and Lesser Tunb islands) in a dispute that began decades ago. The three islands are of geo-strategic importance because of their location at the mouth of the Gulf and proximity to the major shipping lanes of the Strait of Hormuz. Progress on both the Sharjah and Sirri Island projects has been slow.
ExportsIn 1977, the UAE became the first country in the Middle East to export LNG, sending its first load to the Tokyo Power Company (TEPCO) as part of a long-term supply agreement. The UAE signed a second contract in 1990 to double LNG exports to Japan, and in 1994, a third LNG train at Das Island began operation to help fulfill the terms of the agreement. The terminal at Das Island has a capacity of 6 million tons per year of LNG (over 470 MMcf of natural gas), 2.7 million tons per year of LPG (approximately 31 million barrels of oil equivalent), and almost 1 million tons per year of other associated products. Plans are moving forward to increase the capacity of the first two LNG trains substantially—reportedly by up to 10 million tons per year (788 MMcf)—and they should come on line around the same time the contract with TEPCO expires (2019).
In 2012, approximately 95% of UAE’s natural gas exports of 281 Bcf were LNG cargoes. All of UAE’s exported LNG cargoes went to Japan, totaling more than 260 Bcf. With planned expansion at the terminal at Das Island and the country’s new focus on developing its vast natural gas reserves, the UAE could experience export growth in the short to medium term. There is a proposal to expand the Das Island facility with a fourth LNG train that would add roughly 150 Bcf per year capacity. However, the fourth train may end up replacing one of UAE’s older trains so the net gain would be minimal.
ConsumptionThe UAE uses much of its imported and domestically produced natural gas in its extensive EOR operations and to operate its many power plants and desalinization plants. Meeting domestic demand will require large import volumes for the foreseeable future. Advances in EOR techniques and carbon capture and storage (CCS) could free up additional volumes for domestic consumption, and improvements to the domestic electricity grid will further alleviate supply problems.
While the global macroeconomic crises of the last several years dampened energy demand in the UAE—it even declined slightly in 2009—solid economic growth and resulting energy demand over the past few years is again straining the country’s natural gas supplies. Natural gas consumption in UAE reached a record high of more than 2.2 Tcf in 2012.