Identifier
Created
Classification
Origin
04ABUDHABI2437
2004-07-21 11:53:00
CONFIDENTIAL//NOFORN
Embassy Abu Dhabi
Cable title:  

UAE NEARING MAXIMUM OIL PRODUCTION LIMITS

Tags:  EPET PGOV BEXP ENRG ECON EINV TC 
pdf how-to read a cable
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Diana T Fritz 02/06/2007 05:16:32 PM From DB/Inbox: Search Results

Cable 
Text: 
 
 
CONFIDENTIAL

SIPDIS
TELEGRAM July 21, 2004


To: No Action Addressee 

Action: Unknown 

From: AMEMBASSY ABU DHABI (ABU DHABI 2437 - ROUTINE) 

TAGS: EPET, PGOV, BEXP, ENRG, ECON, EINV 

Captions: None 

Subject: UAE NEARING MAXIMUM OIL PRODUCTION LIMITS 

Ref: None 
_________________________________________________________________
C O N F I D E N T I A L ABU DHABI 02437

SIPDIS
Laser1:
 INFO: FCS 
CXABU:
 ACTION: ECON 
 INFO: P/M AMB DCM POL 

DISSEMINATION: ECON
CHARGE: PROG

APPROVED: CDA: RALBRIGHT
DRAFTED: ECON:CCRUMPLER
CLEARED: NONE

VZCZCADI568
RR RUEHC RUEHHH RUEHDE RUCPDOC RHEBAAA
DE RUEHAD #2437/01 2031153
ZNY CCCCC ZZH
R 211153Z JUL 04
FM AMEMBASSY ABU DHABI
TO RUEHC/SECSTATE WASHDC 5206
INFO RUEHHH/OPEC COLLECTIVE
RUEHDE/AMCONSUL DUBAI 4175
RUCPDOC/USDOC WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
C O N F I D E N T I A L SECTION 01 OF 02 ABU DHABI 002437 

SIPDIS

NOFORN

DEPT FOR NEA/RA, NEA/ARP, INR/EC, EB/IEP, EB/CBA
USDOE FOR INT'L AFFAIRS - COBURN, ALSO CALIENDO
USDOE FOR OFFICE OF THE SECRETARY - RHONDA HUDOME
USDOC FOR 1000/OC/
USDOC FOR 4520/ITA/IEP/ONE
USDOC FOR 4530/ITA/MAC/ONE/DGUGLIELMI
4500/ITA/MAC/DAS/WILLIAMSON
3131/CS/OIO/ANESA

E.O. 12958: DECL 07/21/2009
TAGS: EPET PGOV BEXP ENRG ECON EINV TC
SUBJECT: UAE NEARING MAXIMUM OIL PRODUCTION LIMITS

REFS: A) STATE 149293

B) ABU DHABI 2339
C) ABU DHABI 2254
D) ABU DHABI 2028 AND PREVIOUS

C O N F I D E N T I A L SECTION 01 OF 02 ABU DHABI 002437

SIPDIS

NOFORN

DEPT FOR NEA/RA, NEA/ARP, INR/EC, EB/IEP, EB/CBA
USDOE FOR INT'L AFFAIRS - COBURN, ALSO CALIENDO
USDOE FOR OFFICE OF THE SECRETARY - RHONDA HUDOME
USDOC FOR 1000/OC/
USDOC FOR 4520/ITA/IEP/ONE
USDOC FOR 4530/ITA/MAC/ONE/DGUGLIELMI
4500/ITA/MAC/DAS/WILLIAMSON
3131/CS/OIO/ANESA

E.O. 12958: DECL 07/21/2009
TAGS: EPET PGOV BEXP ENRG ECON EINV TC
SUBJECT: UAE NEARING MAXIMUM OIL PRODUCTION LIMITS

REFS: A) STATE 149293

B) ABU DHABI 2339
C) ABU DHABI 2254
D) ABU DHABI 2028 AND PREVIOUS


1. (U) Classified by Charge d'Affaires Richard A.
Albright, a.i., for reasons 1.5 (B) and (D).


2. (C/NF) Summary: During a July 20 meeting with Charge
and Econoff, Abu Dhabi National Oil Company (ADNOC) Deputy
CEO and new member of the Supreme Petroleum Council (see
ref C) Abdullah Nasser Al-Suweidi stated that the UAE has
taken concrete steps to increase oil production and bring
down oil prices, but is quickly approaching its production
capacity. The UAE is producing nearly 2.5 million barrels
per day (mbd),and could move to its maximum sustainable
capacity of 2.6 fairly quickly. The UAE could reach its
short-term surge capacity of 2.8 mbd only if it lifted
restrictions on flaring gas. End summary.

--------------
Current Oil Output
--------------


3. (C/NF) Al-Suweidi emphasized that the UAE could
comfortably produce 2.6 mbd -- 1.3 mbd from Abu Dhabi's
onshore fields (operated by ADCO),600,000 b/d from the
ADMA-OPCO operated offshore fields, approximately 550,000
b/d from the offshore Zakum fields, and less than 130,000
b/d from Dubai. He suggested that production could surge
to 2.8 mbd only if the UAE lifted restrictions on flaring
gas. (Note: ADNOC has a "Zero Flaring" policy out of
concern for potentially damaging Abu Dhabi's fields and
resultant environmental fall-out. But since GASCO, the
local gas processing company, does not have the capacity to
manage the additional associated gas, higher oil output
would require the flaring of the excess gas. End note.)


4. (C/NF) Al-Suweidi acknowledged that while ADNOC could
hypothetically reach 3.0 mbd at the well-head, being able
to actually move, process, and export that amount would
require significant investment to increase the capacity of
the surface facilities (i.e. the collection and processing
facilities).

--------------
Plans To Increase Production
--------------


5. (C/NF) Al-Suweidi told Charge that ADNOC already had
developed plans to increase Abu Dhabi's sustainable
production capacity to 2.7 mbd by end 2005 and 3.0 mbd by
2008, most of which would come from new production in the
Upper Zakum field and smaller offshore fields. Development
of these other offshore fields requires major investments
in infrastructure, however, and will take some time. He
added that ADCO's (onshore) production capacity had fallen
100,000 b/d during the last year, but -- with field
upgrades -- would again increase to 1.4 mbd by the end of

2005.


6. (C/NF) Al-Suweidi confirmed that ADNOC is making
progress on its evaluation of the final three bids from
ExxonMobil, BP and Shell to develop the Upper Zakum field
(ref D). ADNOC recently dispatched a technical team to
Houston, London and The Hague, respectively, to consult
with oil execs from each of the three companies. Al-
Suweidi would not speculate about when the SPC might make a
decision on Zakum, and noted that ADNOC had not even given
the oil companies a deadline for submitting improvements to
their offers. Al-Suweidi added that Upper Zakum probably
would be the last concession for a while, as ADNOC had no
intention of offering new concessions to international oil
companies in the near future. "We have a good mix of
international participation here," and ADNOC probably would
renew any old concessions set to expire in the coming years
(i.e. a Japanese concession in 2011 and other small
concessions in 2013/14).

--------------
Comment
--------------


7. (C) Although not specifically addressed by Al-Suweidi,
there are other factors that could temporarily limit the
UAE's oil production. The weather and high winds sometimes
prohibit full production from the offshore facilities.
Regularly scheduled maintenance also can affect the
production of any one field for an extended period of time.
Finally, ADNOC would have to receive specific instructions
from the Supreme Petroleum Council (SPC) to increase
production significantly above current levels and flare
gas. Al-Suweidi's recent appointment to the SPC, however,
and his claim that "[all SPC members] think the same way,"
make us less concerned that the SPC would contradict ADNOC.

Albright