BMI View : Production growth for both oil and gas will be relatively slow, due to a lack of major new discoveries brought online. The UAE remains dependent on field expansion s and expensive enhanced oil recovery to offset depletion rates, leaving it somewhat exposed to a slowdown in spending in a sustained lower oil price environment. The downstream sector received a major boost in 2015 with the 417,000b/d Ruwais expansion. However, further upside in the sector is limited. Fuels demand growth will remain on a firm upward trajectory , due to a mix of positive demographic and economic drivers. Gas consumption growth will be softer, dragged down by electricity subsidy reform and diversification of the domestic energy mix.
|e/f = BMI estimate/forecast. Source: BMI/EIA|
|Crude, NGPL & other liquids prod, 000b/d||3,448.2||3,677.4||3,705.4||3,798.0||3,968.3||4,024.9||4,045.4|
|Dry natural gas production, bcm||54.1||58.0||63.9||71.6||71.7||71.7||71.9|
|Dry natural gas consumption, bcm||66.7||70.7||74.5||78.6||81.4||83.8||86.4|
|Refined products production, 000b/d||501.6||506.6||557.3||780.2||897.2||924.2||933.4|
|Refined products consumption & ethanol, 000b/d||694.0||716.2||740.6||765.0||790.2||815.5||840.8|
We highlight the following trends and developments in the UAE's oil and gas sector:
Oil and gas production growth will remain relatively muted in the coming years, despite a number of projects under development. The UAE is heavily reliant on maturing oil fields, and accelerated depletion rates in a lower oil price environment are a material threat to the sector.
The UAE holds little underexplored territory and the space for a major new discovery is limited.
Refined fuels consumption growth is set to remain strong, despite ongoing subsidy reform. The impact of reforms will be somewhat blunted in the short run by the sharp fall in international oil prices and a sustained uptrend in vehicle sales.
Gas consumption growth will remain strong, although the pace of growth will slow progressively due to increased electricity tariffs and diversification of the domestic power mix towards nuclear and renewables.
The UAE has seen its refined capacity and refined fuels output grow significantly in 2015 as the Ruwais refinery expansion was brought on stream. The UAE will become a net exporter of refined fuels from 2016, added to its substantial crude export volumes.