OMV, central Europe's biggest petroleum group, is in preliminary talks with the Abu Dhabi National Oil Company (ADNOC) over gas development in the emirate, where it would also be interested in acquiring oil concessions. The Austrian firm, in which Abu Dhabi's International Petroleum Investment Company (IPIC) holds a 20 per cent stake, could also explore for new UAE gasfields and develop gas projects in the Northern Emirates.
"The vision is that in a few years - we will have projects here in the UAE and can contribute to the gas supply," Klaus Angerer, the manager of OMV's regional office in Abu Dhabi, told the Gas Arabia Summit in the capital yesterday. "We are discussing with ADNOC about possible engagement." OMV had "a number of project ideas" under discussion with ADNOC, he said, especially in its key areas of expertise, which included boosting recovery from mature oilfields. "Our feeling is there will be a positive response. It's very, very preliminary. Abu Dhabi is interested in talks with companies like ours."
Like Norway's Statoil, which last week expressed interest in joining the select club of Abu Dhabi concession holders, OMV does not produce oil or gas in the UAE. It is closely involved with ADNOC and IPIC, however, in major refining and petrochemicals joint ventures in Abu Dhabi and overseas. The expiry of some of Abu Dhabi's onshore and offshore oil concessions, in 2014 and 2018 respectively, has opened an opportunity to seek international partners to develop its oil and gas reserves, a course the Government may follow in order to gain access to a broader range of advanced technology for production and reservoir management.
OMV holds a 10 per cent interest in the Pearl Petroleum consortium led by the Sharjah-based affiliates Dana Gas and Crescent Petroleum, which produces gas in Iraqi Kurdistan. Sharjah is one of the northern emirates where OMV would consider a gas venture. "We are interested in gas development in Abu Dhabi as it has the biggest gas resources, but we are also considering operations in Ras al Khaimah and Sharjah," Mr Angerer said.
During his conference presentation, he estimated that the UAE was burning 3 billion cubic feet per day (cfd) of gas, or about a third of its current gas supply including imports, just to produce power and water. That could nearly triple to 8 billion cfd by 2020, at which time the country's planned nuclear power capacity would be insufficient to close a widening gap between supply and demand, he projected.
ADNOC and other UAE oil and gas producers would need to launch a major thrust to develop untapped gasfields, as well as pursuing energy-efficiency initiatives and projects to free up the roughly 2 billion cfd of gas that is currently reinjected into oil deposits to boost crude output, Mr Angerer suggested. Another source of future UAE gas supplies could be undiscovered gas deposits. "We can assume that some gas deposits were overlooked when the exploration focus was oil," he said.
The UAE had sufficient gas reserves and access to technical expertise to avert a looming gas shortage, Mr Angerer said. Nevertheless, a Government-led research and investment focus on sour gas, analogous to Abu Dhabi's Masdar clean energy initiative, would be helpful; and the emirates needed new contractual and commercial frameworks for gas development, spelling out how costs would be recovered and profits shared.
With technically challenging "unconventional" gas resources, including sour gas and tight gas, increasingly becoming the focus of gas development in southern Arabia, regional gas production costs were set to increase from between US$1 and $2 per million British thermal units (BTU) to more than $5 per million BTUs, Mr Angerer projected. The chairman of the conference session, Mohamed Dauod, said the focus of energy development in Abu Dhabi was shifting towards gas from oil. "I think this change is coming for Abu Dhabi. It will come very soon," said Mr Daoud, a manager of the ADNOC operating unit Abu Dhabi Company for Onshore Oil Operations.
In another development, a senior executive of Wintershall Holding, the oil and gas unit of the German chemicals company BASF, said Wintershall and IPIC might announce their first oil and gas development joint venture in coming months. The two had agreed in 2008 to collaborate on projects in the Middle East and Caspian regions. "We will hopefully be able to announce an upstream project in the greater Gulf region this year," Gerhard Haase, Wintershall's representative in Abu Dhabi, told Dow Jones.