UAE has 94 Years Oil Production Left?

photo: Arabianbusiness.com

According to the Eni World Oil and Gas Review, the UAE now has 94 years of remaining production. This is based on currently estimated reserves and current production levels. Interestingly, the figure has increased in recent times (it was 86 years in 2008). Of course such figures always vary, based on changes in reserve estimates and changes in production levels.

The UAE has done a tremedous job in diversifying its economy. Going back 25 years, the country was almost entirely dependent on revenues from the upstream oil and gas sector but the vision on the ruling family has led to a vibrant and highly diversified economy. Of course oil revenues are still important but other sectors such as transportation, tourism, financial services and of course, construction have been very strong (despite some blips around the time of the global financial crisis).

Following on from my previous blog posts, Iraq could learn a lot from the UAE. Iraq has a reserves/production ratio of 130 years currently. Of course this figure will shift, as new reserves are identified and production levels are ramped up. Iraq effectively has a blank canvas on which to map out the future for the economy. Hydrocarbon wealth has to be the starting point to build a strong and diversified economy but a short glance across the Arabian Gulf can show Iraq just what can be done.

The world currently has a reserves/production ratio of some 45-55 years (depending on the source of the data). However this figure has remained stable for the last 15 years or so. With more oil being discovered and improved oil recovery techniques, the much discussed production peak, has remained in the distance. Similarly, significant discoveries of unconventional oil and gas will also prolong the world's hydrocarbon future. However the Middle East, with its huge reserves and high reserves/production rations, will continue to dominate the world's oil production for many years to come.

Iraq Gas Deal Signed

Photo : dinarddiscussions.com

Reports in Arabianoilandgas.com have confirmed that Shell and Mitsubishi are set to sign a deal for a huge project to capture the gas that is currently flared in the south of Iraq. The south of Iraq holds some 70% of the country's gas reserves

Iraq desperately needs this gas to provide power, which is chronically short supply at present, with electricity supplies to much of industry being currently rationed down in summer months, in order to ensure that sufficient power is available for domestic customers.

This mammoth project will create huge logistical challenges but is an essential part of Iraq's reconstruction. Initially, the extra gas will be required for electricity generation. However as more gas becomes available, this will also create many opportunities for downstream investment.

The Iraq Government is already giving incentives for foreign investment in the downstream sector, recognising the societal benefits that this investment will bring to the country. This investment will take some time and effort to complete but new refineries with integrated crackers and downstream plants will appear on the horizon.

Iraq - Next Petrochemicals Hot Spot?

map : http://www.state.gov/r/pa/ei/bgn/6804.htm

Having recently read the excellent analysis of 'The Journey of Post-War Hydrocarbon Development in Iraq' by Ann-Marie Carberry of Contax Partners, I wonder whether Iraq is a likely future hotspot for petrochemicals development.

Iraq has substantial oil reserves, together with very significant amounts of associated gas. Much of the gas is currently flared (estimates indicate that as much as 60% is flared).

Very recently, the International Energy Agency identified Iraq, UAE and Angola as centres of supply growth in oil and gas supplies.

Now the government has recognised and is fully committed to developing the oil and gas industry. This means huge new investment and a complete rebuild of the infrastructure, including ports and transportation networks.

However Iraq also has significant internal needs for petrochemicals as it rebuilds housing and other buildings destroyed during the years of conflict.  Current production capacity is limited - the Basrah Petrochemical Complex has a small cracker and associated downstream plants but there is nothing of the same scale as new plants in nearby GCC Countries.

As with other Middle Eastern countries, developing a petrochemicals industry also brings jobs - an essential requirement for post-war stability in the country.

The challenges will be significant. EPC costs will be higher due to the security risk and lack of skilled labour locally. Lack of infrastructure will make projects more difficult to implement.

However with abundant gas and a need to develop, there is clearly potential for those who wish to develop this region and market