Abu Dhabi's oil expansion plans hit - report

Abu Dhabi's plans to expand its oil production capacity has been hit by supply cuts and uncertainties over concession renewals, says a new report by Morgan Stanley.

Analysts at the investment bank said the emirate had been “forced to dramatically curb expansion projects” to raise its capacity by 40 percent to 4 million barrels per day (bpd) by 2015.

“The UAE’s foreign partners, including Total, Shell, BP and ExxonMobil, are reluctant to invest in further idle capacity expansion at a time when they cannot sell what they produce and are facing an uncertain outlook regarding the renewal of their concession agreements,” reported UAE daily The National on Monday, citing the study.

A number of concessions covering Abu Dhabi oilfields that were signed in the 1930s will expire in 2014 and 2018.

But the government has yet to inform the foreign partners in joint ventures with Abu Dhabi National Oil Company (ADNOC) whether and on what terms the contracts will be offered for renewal, the report added.

Several projects that would have added roughly 390,000 bpd of new oil output “have now slipped beyond 2012”, according to Dr Sadad al Husseini, a former Saudi Aramco executive who contributed to the Morgan Stanley report.

READERS' COMMENTS

MORE FROM ARABIANBUSINESS.COM