ADNOC and ExxonMobil CEOs Discuss New Opportunities During Visit to Review Progress of US$ 30 Billion Upper Zakum Expansion
Abu Dhabi, UAE – May 7, 2019: His Excellency Dr. Sultan Ahmed Al Jaber, UAE Minister of State and Group CEO of the Abu Dhabi National Oil Company (ADNOC), and Darren W. Woods, Chairman and CEO of Exxon Mobil Corporation (ExxonMobil), met to explore new opportunities for collaboration in the upstream and downstream sectors, and discuss wider regional and business-related developments of mutual interest.
The discussions coincided with a joint visit to review the progress of the over US$ 30 billion (AED 110 billion) expansion taking Upper Zakum to a production capacity of 750 thousand barrels per day (mbpd) and 1 million barrels per day (mmbpd) respectively, with the latter planned for 2024.
ADNOC is leveraging mutually beneficial partnerships to drive new commercial opportunities and expand its portfolio across the upstream and downstream sectors, to enable the UAE’s socio-economic development objectives.
H.E. Dr. Al Jaber said: “Our partnership with ExxonMobil going back 80 years reflects the strong, deep-rooted and long-standing economic and political ties between the UAE and the US. At ADNOC, we continue to place great importance on our strategic partnerships with the US energy sector, which has contributed to further enhancing the economic relations between our two countries.
“Our existing partnership with ExxonMobil on the Upper Zakum field is a prime example of how ADNOC engages with world-class partners that bring expertise and advanced technology to unlock value from our resources, for mutual benefit, and deliver the greatest possible returns to the UAE. We are keen to strengthen this strategic partnership across the entire value chain, as we accelerate delivery of our 2030 smart growth strategy.”
During the visit, H.E. Dr. Al Jaber and Mr. Woods inspected key facilities at Al Ghallan Island which is under development for future production as part of the ongoing project, known as UZ750, to increase the production capacity of the Upper Zakum field to 750 mbpd.
They also planted a Ghaf tree on the island, celebrating the UAE’s national tree and official symbol of the ‘Year of Tolerance.’ The evergreen tree, native to the desert, is an important part of the UAE’s rich heritage, symbolizing resilience, unity, and peace.
Woods said: “We have shared many successes in the UAE together over the past 80 years, most notably with ADNOC in the Upper Zakum joint venture, and we look forward to building on this strong foundation. The joint success between ADNOC and ExxonMobil on Upper Zakum is a testament to what is possible when national and international energy companies work together.”
The UZ750 project is estimated to see an investment of around US$ 21.8 billion (AED 80 billion) and comprises four new artificial islands, to accommodate drilling rigs, processing facilities and infrastructure required to handle production capacity growth to 750 mbpd, effectively creating an onshore environment offshore.
H.E. Dr. Al Jaber and Mr. Woods discussed the new substantial conventional and unconventional oil and gas exploration opportunities in Abu Dhabi, following ADNOC’s announcement, last week, to offer five major offshore and onshore blocks for competitive bidding.
The CEOs also discussed downstream investments, including gas and liquefied natural gas (LNG) opportunities, following ADNOC’s 2018 announcement of ambitious expansion plans in Petrochemicals and Refining.
ExxonMobil and ADNOC share a long history of technical collaboration in the downstream business both through licensing of technologies as well as support in catalysts. Both companies are exploring means by which this relationship can be extended further into research and development (R&D).
The visit follows the award, in April, by ADNOC and its joint venture partners, ExxonMobil Abu Dhabi Offshore Petroleum Company Limited and INPEX Corporation (INPEX), of a Front-End Engineering Design (FEED) contract to increase the production capacity of the Upper Zakum oilfield to 1 mmbpd by 2024.
The 1 mmbpd expansion project, which is an integral component of ADNOC’s plan to increase its oil production capacity to 4 mmbpd by 2020 and 5 mmbpd by 2030, is estimated to cost approximately US$ 8 billion (AED 29.4 billion), including drilling-related expenditure. It will capture synergies from the existing UZ750 project, optimizing costs and maximizing value for ADNOC and its partners.
The Upper Zakum Development utilizes extended reach drilling to optimize well numbers and enable maximum reservoir contact. In recent years, the Development saw one of the world’s longest wells at 35,800 feet measured depth.
The Upper Zakum oilfield, located offshore Abu Dhabi, is the second-largest offshore oilfield and the fourth-largest oilfield in the world.
The Upper Zakum Development is also enabling synergies with the Lower Zakum Concession through shared multi-well pad drilling and streamlined rig utilization that are enhancing efficiencies and optimizing costs. In addition, and to gain further efficiencies, new extended reach drilling activity for the Lower Zakum Concession is expected to start later this year from Upper Zakum’s Al Ghallan Island.
Artificial islands provide significant cost and environmental benefits, particularly in shallow water, by enabling the use of lower-cost land-drilling rigs instead of high-cost offshore jack-up drilling rigs.
ADNOC has a proven record of developing artificial islands and, as part of its continued commitment to protecting the UAE’s marine environment, adopts this approach in developing Abu Dhabi’s shallow water hydrocarbon resources to minimize environmental impacts and optimize costs.
As a result of ADNOC’s long-standing experience in utilizing artificial islands, it has also adopted this approach in the development of the Ghasha Concession where 10 artificial islands are being constructed for the Hail, Ghasha and Dalma offshore sour gas megaproject.
ADNOC has a strong track record of energy cooperation with US companies across its entire value chain, and this has strengthened in recent months.
In October 2018, Baker Hughes, a GE company, acquired a five percent stake in ADNOC’s subsidiary, ADNOC Drilling, in a transaction that valued ADNOC Drilling at approximately US$ 11 billion (AED 40.3 billion). In addition, in February this year, ADNOC signed an agreement awarding Occidental Petroleum an onshore block following Abu Dhabi’s first-ever competitive exploration bid round.
ADNOC also collaborates with Occidental in onshore sour gas production and processing through ADNOC Sour Gas, a joint venture company between ADNOC, which owns a 60 percent share and Occidental, which owns a 40 percent share.
ADNOC is a major diversified group of energy and petrochemical companies that produces about 3 million barrels of oil and 10.5 billion cubic feet of raw gas a day. Its integrated upstream, midstream and downstream activities are carried out by 14 specialist subsidiary and joint venture companies.
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