United Arab Emirates Oil and Gas Report Q3 2011

We forecast that the United Arab Emirates will account for 8.6% of Middle East regional oil demand by 2015, while providing 9.9% of supply. Middle East regional oil use rose to an estimated 7.6mn b/d in 2010. It should average 7.9mn barrels per day (b/d) in 2011 and then climb to around 8.9mn b/d by 2015. Regional oil production was 22.83mn b/d in 2001 and averaged an estimated 24.5mn b/d in 2010. After an estimated 25.7mn b/d in 2011, it is set to rise to 30.5mn b/d by 2015. Oil exports are growing steadily, because demand growth is lagging the pace of supply expansion. In 2001, the region was exporting an average of 17.85mn b/d. This total will have eased to an estimated 16.88mn b/d in 2010 and is forecast to reach 21.54mn b/d by 2015. Iraq has the greatest export growth potential, followed by Qatar. In terms of natural gas, the region consumed an estimated 391bn cubic metres (bcm) in 2010, with demand of 487bcm targeted for 2015, representing 25% growth. Production of an estimated 455bcm in 2010 should reach 642bcm in 2015 (+41%), which implies net exports rising to 154bcm by the end of the period. The UAE's estimated share of gas consumption in 2010 will have been 15.5%, while its share of production is put at 11.2%. By 2015, its share of gas consumption is forecast to be 15.9%, with the country accounting for 9.7% of supply.
The 2010 full-year outturn was US$77.45/bbl for OPEC crude, which delivered an average for North Sea Brent of US$80.34/bbl and for West Texas Intermediate (WTI) of US$79.61/bbl. The BMI price target of US$77 was reached thanks to the early onset of particularly cold weather, which drove up demand for and the price of heating oil during the closing weeks of the year.
Global GDP growth in 2011 is forecast at 3.5%, down from 4.3% in 2010. Growth in the US is now expected to slow down, but growth in the Eurozone should be marginally higher than last year, while Chinese economic expansion will slow and Japan’s growth will slump to 0.7% as a result of the devastating earthquake and tsunami in March 2011. Our oil price forecast for 2011 is US$101.90/bbl for the OPEC Basket, putting Brent at US$106/bbl and West Texas Intermediate (WTI) at US$95.30, although these differentials are subject to change.
UAE real GDP rose by 1.4%% in 2010, and we expect average annual growth of 3.35% in 2010-2015. We expect oil demand to rise from an estimated 682,000b/d in 2010 to 771,000b/d in 2015, lagging our underlying economic assumptions. State-owned Abu Dhabi National Oil Company (ADNOC) is the biggest national oil company, working in partnership with major international oil companies (IOCs) to deliver 2.85mn b/d of oil and liquids production in 2010, rising to 3.02mn b/d by the end of the forecast period – subject to OPEC quota policy. Gas production should reach 62bcm by 2015, up from 51bcm in 2010. Consumption is expected to rise from 61bcm in 2010 to 77bcm by the end of the forecast period, requiring net imports of around 15.8bcm.
Between 2010 and 2020, we are forecasting an increase in UAE oil production of 22.9%, with volumes rising steadily to 3.50mn b/d by the end of the 10-year forecast period. Oil consumption between 2010 and 2020 is set to increase by 28.0%, with growth slowing to an assumed 3.0% per annum towards the end of the period and the country using 872,500b/d by 2020. Gas production is expected to rise from an estimated 51bcm in 2010 to 70bcm by the end of the period. With 2010-2020 demand growth of 62.9%, this provides a net gas import requirement rising to nearly 30bcm over the period.
The UAE now holds first place, above Israel and Qatar, in BMI’s composite Business Environment Ratings (BERs), which combine upstream and downstream scores. The UAE holds second place, behind Qatar, in BMI’s updated upstream ratings, thanks largely to its significant oil and gas resource base and investor-friendly climate. It stands just two points behind Qatar and may have to settle for second best. The UAE’s score reflects the country’s gas reserves, high RPR, plus non-state competition, established licensing framework and generally encouraging country risk factors. The UAE is around the mid-point of the league table in BMI’s downstream ratings, with some high scores and further progress up the rankings possible over the longer term. It is ranked fifth, ahead of Qatar and Bahrain, thanks largely to high scores for oil and gas demand, refining capacity expansion and nominal GDP.


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Executive Summary 7
SWOT Analysis 9
United Arab Emirates Political SWOT 9
United Arab Emirates Economic SWOT 10
United Arab Emirates Business Environment SWOT 11
UAE Energy Market Overview 12
Regional Energy Market Overview 14
Oil Supply And Demand 14
Table: Middle East Oil Consumption (000b/d) 15
Table: Middle East Oil Production (000b/d) 16
Oil: Downstream 17
Table: Middle East Oil Refining Capacity (000b/d) 17
Gas Supply And Demand 18
Table: Middle East Gas Consumption (bcm) 18
Table: Middle East Gas Production (bcm) 19
Liquefied Natural Gas 20
Table: Middle East LNG Exports/(Imports) (bcm) 20
Business Environment Ratings 21
Middle East Region 21
Composite Scores 21
Table: Regional Composite Business Environment Rating 21
Upstream Scores 22
Table: Regional Upstream Business Environment Rating 22
UAE Upstream Rating – Overview 23
UAE Upstream Rating – Rewards 23
UAE Upstream Rating – Risks 23
Downstream Scores 24
Table: Regional Downstream Business Environment Rating 24
UAE Downstream Rating – Overview 25
UAE Downstream Rating – Rewards 25
UAE Downstream Rating – Risks 25
Business Environment 26
Legal Framework 26
Intellectual Property Rights 26
Corruption/Red Tape 26
Physical Infrastructure 27
Labour Force 28
Foreign Investment Policy 29
Foreign Trade Regime 30
Tax Regime 31
Security Risk 31
Industry Forecast Scenario 33
Oil And Gas Reserves 33
Oil Supply And Demand 33
Gas Supply And Demand 34
LNG 35
Refining And Oil Products Trade 36
Revenues/Import Costs 36
Table: UAE Oil And Gas – Historical Data And Forecasts 37
Other Energy 38
Table: UAE Other Energy – Historical Data And Forecasts 40
Key Risks To BMI’s Forecast Scenario 40
Long-Term Oil And Gas Outlook 40
Oil And Gas Infrastructure 41
Oil Refineries 41
Table: Refineries In The UAE 41
Oil Pipelines 43
Gas Storage Facilities. 43
LNG 43
Table: LNG Export Terminals in the UAE 44
Gas Pipelines 44
Macroeconomic Outlook 46
Table: United Arab Emirates – Economic Activity 47
Competitive Landscape 48
Table: Key Domestic And Foreign Companies In The UAE’s Oil And Gas Sector 49
Overview/State Role 49
Licensing And Regulation 49
Government Policy 50
International Energy Relations 50
Table: Key Upstream Players 52
Table: Key Downstream Players 52
Company Monitor 53
Abu Dhabi National Oil Company (ADNOC) 53
Dolphin Energy 58
Emirates General Petroleum Corporation (Emarat) 61
Emirates National Oil Company (ENOC) 63
ExxonMobil 65
BP – Summary 68
Rosneft – Summary 68
Total – Summary 68
ConocoPhillips – Summary 69
Royal Dutch Shell – Summary 69
Korea National Oil Corporation – Summary 70
Dana Gas – Summary 71
Occidental Petroleum – Summary 71
Japan Oil Development Company (JODCO) – Summary 71
Cosmo Oil – Summary 72
Abu Dhabi National Energy Company (TAQA) – Summary 72
CNPC – Summary 72
RAK Petroleum – Summary 73
Oil And Gas Outlook: Long-Term Forecasts 74
Regional Oil Demand 74
Table: Middle East Oil Consumption (000b/d) 74
Regional Oil Supply 75
Table: Middle East Oil Production (000b/d) 75
Regional Refining Capacity 76
Table: Middle East Oil Refining Capacity (000b/d) 76
Regional Gas Demand 77
Table: Middle East Gas Consumption (bcm) 77
Regional Gas Supply 78
Table: Middle East Gas Production (bcm) 78
UAE Country Overview 78
Methodology And Risks to Forecasts 79
Glossary Of Terms 80
Oil And Gas Ratings: Revised Methodology 81
Introduction 81
Ratings Overview 81
Table: BMI Oil And Gas Business Environment Ratings: Structure 82
Indicators 83
Table: BMI Oil And Gas Business Environment Upstream Ratings: Methodology 83
Table: BMI Oil And Gas Business Environment Downstream Ratings: Methodology 84
BMI Methodology 86
How We Generate Our Industry Forecasts 86
Energy Industry 87
Cross checks 87
Sources 87
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