The United Arab Emirates (UAE) is planning to ramp up oil production in order to capitalize on high prices in the aftermath of Russia's Ukraine war. UAE's ambitious goal is to raise oil output from around 3.5 million barrels a day currently to around 5 million barrels a day by 2025.
According to Bloomberg, Abu Dhabi National Oil Company (Adnoc) aims to produce 5 million barrels a day by 2025. The state-owned company, which accounts for nearly all of UAE's crude, had earlier set the goal of raising output to this level by 2030. However, the goal has been advanced, taking into account the potential for crude prices to remain high in the backdrop of the war in Europe. The oil rich Gulf emirate also calculates that the world will, sooner rather than later, transition to cleaner energy.
"As we embrace the energy transition and future-proof our business, we will continue to explore potential opportunities that can further unlock value, free up capital and enhance returns," Adnoc told Bloomberg News.
How the Plan Works
According to the report, the oil giant has asked the international partners in its oilfields to hike long-term output levels by at least 10 percent. Adnoc partners with multinational energy giants like Shell, British Petroleum, ExxonMobil, Total, CNPC, ONGC, Oxy and Jodco.
The report also says that the UAE will try to boost output to 6 million barrels daily by the end of the decade, if the current plan works.
Is the Goal Achievable?
The target appears to be highly ambitious on multiple fronts. First, the UAE will have to negotiate the output limits put in place by the 23-nation cartel of Opec plus allies. Second, a quick capacity expansion will involve billions of dollars. Though the UAE believes global oil demand will remain elevated for decades to come, there are bound to be phases when the price will slide.
How Big is UAE Output?
UAE's daily crude oil production is about 3.5 million barrels. At this level it is the third largest oil producer in the Opec cartel, after Saudi Arabia and Iraq. According to the Gulf state, it can pump more than 4 million barrels a day but it has set the capacity below that level to comply with the cartel's output restrictions.