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  • The discovery of a giant gas field in the Middle East presents new opportunities for Chinese oil and gas companies
    Source:雪球
    The United Arab Emirates (UAE), a major OPEC producer, announced a major natural gas discovery. The discovery is believed to be 80 trillion cubic feet (2.27 trillion cubic meters) of shallow natural gas. According to analysts at Wood Mackenzie, the discov
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    Release time:2021-06-08
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    The United Arab Emirates (UAE), a major OPEC producer, announced a major natural gas discovery.

    The discovery is believed to be 80 trillion cubic feet (2.27 trillion cubic meters) of shallow natural gas.

    According to analysts at Wood Mackenzie, the discovery could be the world's largest gas discovery in the last 15 years, after the discovery of a gas field in Turkmenistan in 2005.


    01. A giant gas field was discovered in the Middle East

    On February 3, 2020, during the signing of a strategic cooperation agreement between the Abu Dhabi National Oil Company (ADNOC) and the Dubai Supply Authority, it was announced that:

    About 80 trillion cubic feet (2.27 trillion cubic meters) of shallow gas has been discovered between Dubai and Abu Dhabi, the largest member of the United Arab Emirates.

    Under the agreement, the two sides will continue to explore and develop shallow gas resources in the area.

    Analysts at Wood Mackenzie said of the discovery: "The discovery is the world's largest gas discovery in nearly 15 years and, due to the shallow depth of the area, means development costs will be significantly lower than some of Abu Dhabi's acidic gas resources." Finding oil and gas on this scale at this time will be a priority for the UAE in the future. "

    It is understood that although the United Arab Emirates has some natural gas resources, but mostly used for formation injection, so the United Arab Emirates has been importing most of the natural gas from neighboring Qatar.

    In recent years, the Abu Dhabi National Oil Company (ADNOC) has put more emphasis on natural gas development and invested a lot of money and people in a plan to increase the UAE's natural gas production in order to make it a net exporter.

    The discovery is likely to play a pivotal role in the UAE's gas market, enabling major development projects while reinforcing the country's goal of self-sufficiency in gas.

    At the same time, the discovery could pave the way for future gas exports from the UAE.


    02. UAE, a major oil and gas country in the Middle East

    Located at the southeastern tip of the Arabian Peninsula, the United Arab Emirates is an important member of OPEC. The country covers an area of 83,600 square kilometers and is made up of seven emirates, including Abu Dhabi and Dubai.


    The UAE is rich in oil and gas resources. According to the BP Statistical Yearbook of World Energy released in 2019, the UAE had 13 billion tons of proven oil reserves in 2018, ranking fifth in the Middle East and eighth in the world. Proven natural gas reserves are 5.9 trillion cubic meters, ranking fourth in the Middle East and ninth in the world.

    Among them, Abu Dhabi is the region with the most abundant oil and gas resources, accounting for more than 95% of the total oil and gas resources in the United Arab Emirates.

    As exploration and production continues, the UAE has made several major discoveries in recent years, following BP's estimate of proven oil and gas reserves in 2018.

    Of these, in November 2019, Abu Dhabi announced 105 billion barrels of new oil discoveries, moving it up to sixth place in the world.

    At the same time, the country also announced the discovery of 58 Tcf of conventional gas, bringing its total reserves to 273 Tcf (7.8 Tcf).

    With the discovery of 80 trillion cubic feet (2.27 trillion cubic meters) of shallow gas, the UAE has become a real gas powerhouse.


    03. It may bring development opportunities for Chinese oil and gas enterprises

    The United Arab Emirates has long been considered a strategic destination for oil and gas cooperation, due to its wealth of oil and gas resources, political stability and manageable risks, as well as the implementation of mining tax contracts to ensure the rights of partners.

    On the other hand, the UAE and China have highly complementary economies and highly aligned interests and enjoy broad prospects for cooperation.

    Since 2000, China and the UAE have carried out a number of oil and gas cooperation projects involving CNPC, CNOOC and private enterprises in pipeline construction, geophysical exploration, oil and gas field development, engineering technical services, material equipment, oil trade and other aspects.

    Among them, in terms of engineering and technical services, on January 15, 2020, CNPC Engineering won the Abu Dhabi Natural Gas Treatment Plant Project with a contract value of 248 million US dollars (equivalent to 1.73 billion yuan).

    In terms of cooperation in geophysical exploration, on July 19, 2018, CNPC Oriental Geophysical Prospecting signed a contract with Abu Dhabi National Oil Company for offshore and onshore 3D acquisition, with the contract amount exceeding 10 billion yuan, setting a record of the highest amount of 3D acquisition in the history of global geophysical exploration industry.

    In addition, Chinese oil and gas companies are now deeply involved in onshore and offshore oil and gas development in the country.

    In terms of offshore oil and gas development, CNPC and Abu Dhabi National Oil Company signed an agreement in March 2018 to acquire 10% interest in each of two offshore oil blocks, with a cooperation period of 40 years.

    In terms of onshore oil and gas development, PetroChina signed a contract with ADNOC in February 2017 to develop onshore oil fields, becoming ADNOC's third most important partner after Total and BP in terms of shares.

    The project also marks the formal establishment of PetroChina as an important partner in Abu Dhabi. In 2017, the onshore project produced about twice as much oil as the Daqing oilfield, accounting for more than 50 percent of the UAE's total crude oil production.

    Notably, in addition to state-owned enterprises, a large number of private enterprises have also started the road of "digging" in Abu Dhabi.

    In recent years, a number of private enterprises, such as Haimer, Honghua, Yantai Jierui and Obitong, have been actively engaged in Abu Dhabi's oil and gas market, providing drilling RIGS and oilfield services.

    The above projects are just a cross-section of the oil and gas cooperation between China and the United Arab Emirates. With the promotion of many favorable policies, the two sides have ushered in a new blue ocean of in-depth cooperation.

    According to ADNOC's 2030 Strategic Plan, the company is committed to attracting foreign investment to develop its oil and gas business.

    In addition, ADNOC's 75-year and 65-year cooperation on onshore and offshore projects expired in January 2014 and March 2018, respectively, and it intends to bring in Asian oil companies as new partners.

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