The United Arab Emirates (UAE) has made significant investments in expanding its hydrocarbon production capacity and enhancing midstream and downstream infrastructure, according to recent reports from the U.S. Energy Information Administration (EIA).
Despite these investments, actual production in the UAE has been limited over the past decade, averaging just under 3 million barrels per day (bpd). This restraint is due to production cut agreements within OPEC and non-OPEC participating countries, collectively known as OPEC+.
However, the UAE’s national oil company, the Abu Dhabi National Oil Company (ADNOC), has set ambitious targets to increase crude oil production capacity to 5 million bpd by 2027, advancing its previous target of achieving this milestone by 2030, as reported by the Middle East Economic Survey.
To realize its 2027 goal, ADNOC has ramped up upstream exploration and development activities. The company has also boosted planned capital expenditures to $150 billion from 2023 to 2027 and unveiled expansion plans to augment production.
Furthermore, the UAE is concentrating on expanding production capacity in new regions. In recent years, licensing rounds for exploration blocks have been conducted in Abu Dhabi, Sharjah, and Ras Al Khaimah, offering opportunities to both domestic and international oil companies.
While ADNOC reports its official production capacity at 4.5 million bpd, as per the EIA’s Energy Intelligence, there is uncertainty regarding its ability to sustain production at full capacity. Estimates from sources such as Energy Intelligence and Rystad Energy suggest the UAE’s production capacity could range from 4.3 million bpd to 4.4 million bpd. Capacity expansion efforts are expected to facilitate a notable increase in crude oil production, with the majority of the growth anticipated for export.
As of 2022, the UAE ranked as the seventh-largest total liquid fuels producer globally and the third largest among OPEC members. The country’s proved crude oil reserves stood at an estimated 111 billion barrels at the beginning of 2023, up from 107 billion barrels in the previous year.
Being a member of OPEC since 1967, the UAE, along with Saudi Arabia, holds notable spare crude oil production capacity to address potential supply shortages. The organization announced in June 2023 its plans to extend crude oil production targets for member countries until the end of 2024, with adjustments starting in January 2024.
In a departure from other member countries whose production quotas were reduced in June 2023, the UAE’s target increased by 200,000 bpd. However, in the latest OPEC+ meeting in November 2023, the UAE agreed to implement an additional voluntary production cut to its stated targets for the first quarter of 2024, aligning with OPEC+’s efforts to balance global crude oil supply.
This adjustment effectively raises the UAE’s crude oil output target from 3.02 million bpd in 2023 to 3.06 million bpd between January 2024 and the end of March 2024. Subsequently, the UAE’s target is expected to increase to 3.22 million bpd for the remainder of 2024, contingent upon adherence to agreements made in 2023 and no further OPEC+ cuts in 2024.