The Abu Dhabi National Energy Company (Taqa) is hoping to expand its operations in finding new oil and gas deposits over the next two years, the company's chief executive, Peter Barker-Homek, said yesterday. "Eventually we'll start getting into much more exploration," he added. That would start with more investment in the exploration side of the company's oil and gas business over the next 24 months, he said.
Abu Dhabi's energy companies, from the Abu Dhabi National Oil Company operating within the emirate to companies such as Taqa, Mubadala Development and the International Petroleum Investment Company (IPIC) with projects overseas, have traditionally taken a conservative approach to upstream oil and gas investment, concentrating most of their resources on developing known oil and gas fields rather than searching for new ones. But there are signs of a tentative shift towards more exploration.
Mubadala has been at the forefront of the trend. Since March last year the Government-owned conglomerate has signed four joint venture agreements with international and national oil companies to pursue oil and gas exploration in Libya, Kazakhstan, Oman and Bahrain. It also acquired Pearl Energy, which is focused on gas exploration and production in South East Asia, from Aabar Investments.
Now Taqa, which is 75 per cent owned by the Abu Dhabi Government, may be preparing to follow in Mubadala's footsteps. The company already has minor exploration programmes in areas where it produces oil and gas - the North Sea and the Rocky Mountains belt of Canada and the US - but it would like to expand them. Its progress, according to Mr Barker-Homek, will depend on its success at developing expertise in technical areas such as the interpretation of geophysical data from three-dimensional seismic surveys.
Mr Barker-Homek has already engineered Taqa's transformation from an Abu Dhabi utility into an international energy company with US$23 billion (Dh84.47bn) of oil, gas and electricity assets on four continents. Previously, he has stressed as a goal the integration of the company's power stations with its facilities for producing, storing and transporting fuel, which has led to a production focus on gas.
But that started to change last month when Taqa took over from Royal Dutch Shell as the operator of the North Sea pipeline system that transports the European benchmark Brent crude oil. Now Mr Barker-Homek is aiming for a 50-50 split between oil and gas in Taqa's oil and gas production portfolio, partly as a hedge against oil and gas prices heading in different directions. That has already happened in North America and the UK, although oil and gas prices remain more closely linked in continental Europe.
The plunge in North American gas prices this summer to their lowest in seven years while crude prices strengthened was an unwelcome surprise to the continent's gas producers which "no one saw coming", Mr Barker-Homek said. While he does not rule out future surprises, the Taqa chief said he expected gas prices to start recovering this winter and for crude in the long term to head higher due to rising global production costs.
"It's really hard to see a return to cheap oil because this region of the world isn't willing to deplete its cheap resources to feed the planet," he said. firstname.lastname@example.org