x Abu Dhabi, UAEFriday 28 July 2017

Enoc plans oil drilling debut

Enoc, Dubai's petrol retailer, hopes to produce oil for the first time in the emirate and is seeking foreign partners for the task.

Enoc faces rising pressure to provide petrol for motorists as well as natural gas for power generation. Jeff Topping / The National
Enoc faces rising pressure to provide petrol for motorists as well as natural gas for power generation. Jeff Topping / The National

Dubai's petrol retailer hopes to pump oil on its home turf for the first time.

Emirates National Oil Company (Enoc), a government-owned conglomerate with operations in refining and petrol sales, "has begun the process of securing the concession for all areas of Dubai outside the current producing fields" and hopes to recruit international partners soon, according to the latest issue of Insight, Enoc's in-house magazine.

It was Enoc's first public acknowledgement that it has been in negotiations to take control of the oil blocks around Dubai's small producing fields, which are operated by Dubai Petroleum, a separate government-owned company.

Enoc faces rising pressure to provide petrol for motorists as well as natural gas for power generation.

Several months ago, Enoc stations in the Northern Emirates ran dry, sparking intervention from the Governments of Sharjah and Abu Dhabi, while electricity demand in Dubai is expected to grow at about 10 per cent a year.

"They're struggling to meet the domestic need," said Samuel Ciszuk, a consultant at KBC Energy Economics. "It would be in their interest to get exploration going."

Dubai is a minor oil producer compared with Abu Dhabi, which holds the majority of the UAE's 2.8 million barrel per day (bpd) production capacity. About 5 per cent of Dubai's income comes from oil.

Hopes for more hydrocarbon riches in Dubai increased last year after the Government announced it had found an oil deposit offshore, its first discovery in nearly three decades.

Enoc is seeking rights to the areas around fields that are operated by Dubai Petroleum, which has been the main company to pump oil inside the emirate since 2007, when a 40-year concession held by the US's ConocoPhillips and other foreign companies expired.

Enoc's only production is via its 51 per cent stake in Dragon Oil,which pumps primarily in Turkmenistan.

Exploring for more fields could prove technically challenging because wells in the area must usually be drilled deep below the seabed to reach high-pressure deposits.

Some oil executives believe it could take five to 10 years to reach viable quantities of oil because wells have to be drilled as deep as 6km - an expensive and high-risk endeavour.

Should Enoc search for foreign partners for such concessions, it would heat up the race for oil production contracts in the UAE.

ayee@thenational.ae