Ambitious technology projects pave the way for IOCs to boost regional presence.
As investment in cutting edge refining technology reaches new heights in the Middle East international oil companies (IOCs) are scrambling to position themselves as partners on the ‘difficult’ product sectors.
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One such development that will see an IOC partnering an NOC is the huge sour gas production and processing plant in Abu Dhabi.
Natural resources in the region have been concentrated in the hands of NOCs for decades, and the opportunity to work more closely with the companies that control the supply of feedstock has long been sought by the super majors.
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The sour gas issue has been brought to the fore by an energy pinch in the UAE, driven by an unprecedented consumer and industrial surge in energy, chiefly electricity, demand.
In Abu Dhabi the complexities envisaged in the Shah and Bab fields have led to a rethink as to how best to optimise the gas potential of these sour fields, against the considerable financial requirements involved.
The technology required to sweeten such sour gas is expensive and its development costly in both time and resources. Enter the IOC.
“The Dolphin project is now running at full consumption of its current phase and the gas that’s supplied to the UAE is very close to maximum capacity, so alternatives need to be looked at,” said Nick Coles, founder and organiser of the Sour Oil and Gas Advanced Technology (SOGAT) conference, held last month in Abu Dhabi.
The UAE’s estimated gas reserves are considerable, and stand at around 214 trillion cubic feet, placing it fourth among the largest natural gas reserves in the region, after Iran, Qatar and Saudi Arabia.
“Increasing energy costs and growing demand for natural gas has driven the development of sour gas fields around the world,” said Omar Ahmed Suwaina, manager of ADNOC’s onshore exploration and production division.
“In fact we see fields in south west Russia and Canada with 35% H2S and as high as 10% CO2, and here in Abu Dhabi with 10-35% H2S and 10-15% CO2 being developed or under construction for development.”
In the past such fields have been considered uneconomical in the face of cheaper alternatives.
The project is estimated to be worth in the region of US $10 billion. When complete, gas production is expected to be as high as three billion cubic feet per day.
The increased production will be used to help feed the UAE’s growing hunger for natural gas, as well as open the door to greater export potential.
Natural gas use in the Middle East is expected to more than double between by 2030. Figures from the GCC indicate gas consumption in 2005 was 343 billion m3. This is expected to reach 533 billion m3 by 2010.
“It is one of the biggest projects available for participation of international companies in the Middle East. The successful bidder will look forward to a long-term role in the future of Abu Dhabi’s gas development,” said Coles.
As the traditional distinctions between upstream and downstream activities become merged, and the need to expedite energy output spikes in the region, more contracts of this type can be expected.
Successful partnerships on advanced technology projects in the region already include Shell and Mobil’s massive joint venture refineries in Saudi Arabia, and Shell’s close ties for enhance oil recovery with PDO in Oman.
For many years market entry opportunities in the Middle East have been lean for IOCs, but for now the outlook for greater involvement in large-scale petrochemical projects has never looked better.
