ABU DHABI KEY TO U.A.E.

GROWTH UPSTREAM AND

DOWNSTREAM
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Abu Dhabi is pressing efforts to expand its oil and gas productive capacities to meet increasing world demand
for oil and gas.

As the mainstay producer in the United Arab Emirates, Abu Dhabi alone accounts for almost 10% of the world's
crude oil reserves.

U.A.E. reserves are pegged at 98.1 billion bbl, with about 94% of that concentrated in Abu Dhabi. Current U.A.E.
productive capacity is pegged at about 2.4 million b/d. Abu Dhabi produces about 1.8 million b/d of crude and
condensate and holds the bulk of the U.A.E's surplus productive capacity and most of the combined emirates'
potential for significant capacity increases.

The current official Organization of Petroleum Exporting Countries quota for U.A.E. is 2.16 million b/d, and
production is thought to be close to that level.

Overall, U.A.E. has earmarked an estimated $5-6 billion on projects aimed at boosting productive capacity to 3
million b/d of oil by yearend 1995. Accordingly, most of that work will occur in Abu Dhabi, where capacity is
projected to reach 2.5 million b/d by yearend 1995.

Abu Dhabi National Oil Co. (Adnoc) and affiliated companies have completed several major projects to increase
oil and gas productive capacity and more are under way or planned.

Increasingly, Abu Dhabi's focus is on natural gas development and utilization (OGJ, Apr. 19, 1993, p. 17).
Demand for Abu Dhabi gas is growing domestically, in other emirates, and in support of liquefied natural gas
exports.

Abu Dhabi also is pressing ahead with downstream investments within and outside the U.A.E. as a buffer
against volatile oil and gas prices. Investments to date have involved purchasing equity stakes in two European,
partly state owned petroleum companies, and talks reportedly are under way with other western as well as Asian
companies.

DEVELOPMENT PROJECTS

Adnoc General Manager Sohail Al Mazroui said the company recently completed commissioning new facilities in
a key onshore field, Bab, that has peak productive capacity of 350,000 b/d and sustainable productive capacity
up to 250,000 b/d.

Bab was the first onshore oil field discovered in Abu Dhabi, in 1963. Adnoc affiliate Abu Dhabi Co. for Onshore
Oil Operations (ADCO) operates the field.

Bab's further development in 1993 included laying 540 km of flow lines from 145 wells to five new remote
manifold stations and a new central oil and gas separation plant. Last year ADCO also built a new
accommodation complex at Bab and upgraded piping and control systems at the Jebel Dhanna tanker terminal.

During 1993, water injection patterns were commissioned in Bab, Bu Hasa, and Sahil oil fields. Commissioning
was completed on six water injection dusters at the periphery and eight injection clusters at middip in Bab field,
bringing the current total to 21. Late last year, three injection clusters were added in Bu Hasa and four in Sahil.
Water injection rates jumped to 1.63 million b/d at yearend from 1.49 million b/d at the start of the year.

At the same time, ADCO commissioned new gas fired power plants in Bab and Asab and at the Habshan gas
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processing plant.

ADCO also wound up plans for Bu Hasa Thamama F reservoir development and continued studies of a crestal
gas injection scheme for the Bu Hasa Thamama B reservoir. By yearend 1993, ADCO had injected almost 5 bcf
of rich gas and 1.8 bcf of lean gas into the Bu Hasa 295 pilot gas injection well. The Bu Hasa gas injection
project, scheduled for completion in late 1995, will provide injection capacity of 150 MMcfd of gas.

The company is pursuing integrated work programs in Shah and Sahil fields, including 3D seismic surveys in
tandem with studies of water and gas injection for pressure maintenance in Sahil and artificial lift with electric
submersible pumps in Shah.

ADCO also began implementing the Bu Hasa North Shuaiba gas injection project in 1993.

Other tests, pilots, and studies in 1993 focused on:

Thermal decay time logging with borax injection to detect subzonal communication.

Polymer treatment in wet producers.

Horizontal drilling of wet producers and injectors to improve well and reservoir performance.

An acid fracturing pilot in a water injection well at Bab to increase productive capacity.

Early production schemes in undeveloped fields in Northeast Abu Dhabi for reservoir performance
evaluation. The first of these was implemented in Jarn Yaphour and commissioned in 1993. The others,
in Zubbaya, Rumaitha/Shanayel, and Huwaila, were in progress at yearend 1993.

BAB GAS GATHERING/INJECTION

Adnoc, through ADCO, in late June let a $120 million contract to a combine of Bechtel Group, San Francisco,
and Consolidated Contractors International, Athens, for installation of a gas gathering and injection network for
the Cretaceous Thamama C and F reservoirs in Bab field.

Scheduled for completion by yearend 1995, the project includes installation of wellhead equipment, flow lines,
remote manifold stations, and trunk pipelines. Thamama C and F gas will feed into the Habshan gas processing
plant. The project also calls for boosting gas processing capacity at Habshan to 1.8 bcfd from the current 540
MMcfd.

Further, the project will boost condensate production to 131,000 b/d from 5,000 b/d. Most of the condensate will
be exported.

Total Bab project cost is expected to reach about $362 million.

Abu Dhabi is pressing efforts to double its gas productive capacity to feed surging domestic demand for gas for
power generation and water desalination in the emirate as well as gas injection in its oil fields. Demand for
electrical power and fresh water is soaring in Abu Dhabi. During the past 3 years, Abu Dhabi has spent $1.9
billion to boost electrical power production to 9.1 billion kw in 1993 from 7.9 billion kw in 1991 and water
production to 4.8 billion gal in 1993 from 4.4 billion gal in 1991.

ADCO DRILLING

ADCO continues to add reserves in 1994 after logging record activity in 1993.

ADCO last May placed on stream Jam Yaphour field with initial productive capacity of 10,000 b/d of oil and 60
MMcfd of gas. ADCO operates the field, and Adnoc's processing directorate handles Jarn Yaphour downstream
operations under the aegis of the Umm al Nar refinery.

In 1993, ADCO drilled appraisal and exploratory wells in the northeast and southeast portions of its concession,
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in addition to deepening two wells in Bab field. Here is a sample of the activity:

The 7 Rumaitha well had hydrocarbon shows in Thamama Zone B but tested nonproductive and was
completed as an observation well after being drilled to 12,400 ft.

The 7 Qusahwira in Southeast Abu Dhabi tested hydrocarbons in Thamama Zone F and was drilled to
10,870 ft in Hadriya.

Bab 352 was drilled to 10,624 ft below Cretaceous Habshan Zone 3, tested hydrocarbons in Thamama
Zone G, and completed as a Zone F gas producer.

Bab 361 tested hydrocarbons in Thamama Zone H and Habshan Zones 1, 2, and 3. It was to be
completed as a Zone F gas injection well.

SY 23 well at yearend 1993 had been drilled to a point above Permian Khuff/pre-Khuff targets. Delays
were caused by a high pressure zone encountered at 14,750 ft and by later sidetracking.

ADCO last year completed a 3D seismic survey of southern Sahil field and commenced 3D surveys in
Zubbaya/Bu Labyad and Rumaitha/Shanayel fields at yearend 1993. Processing of seismic data led to proposals
for exploratory wells in the Ramhan and Ruwais areas, and additional seismic data needs were defined in the
Mash-Hur, Mender, and Junana areas.

The company operated 10 land rigs in 1993, one more than in 1992, and drilled 34 wells, including wildcats and
appraisal wells. It also conducted 20 workovers in 1993 and, including 19 wells drilled for Adnoc, accounted for
460,278 ft of gross footage, including 183,865 ft for Adnoc.

ABU DHABI OFFSHORE

Al Mazroui said offshore programs near completion include the Umm Shaif gas development project, which will
supply Abu Dhabi Gas Liquefaction Co. (Adgas) an added 650 MMcfd of gas for its third liquefaction train at Das
Island.

The $1.35 billion Adgas gas development and LNG expansion projects are scheduled for commissioning in
second quarter 1994. The third train, said to be the world's biggest, will double Das Island's LNG productive
capacity to almost 5 million metric tons/year.

Laying of a 46 in. pipeline from the Umm Shaif main complex to Das Island is expected to be complete by the
end of September.

Meantime, Adgas has repaid a $500 million loan undertaken during the 1980s to fund various work at Das Island,
notably LNG and LPG storage tanks built as part of the third train project.

The 5 year expansion of the LNG complex at Das Island was part of Adgas' long term commitment to supply
LNG to Tokyo Electric Power Co. (Tepco). The added 2.5 million metric tons/year of LNG to be produced by the
third train is covered by a 20 year contract Adgas and Tepco signed in October 1993. Das Island has supplied
the Japanese electric utility 2.5 million tons/year of LNG since 1977.

ADMA-OPCO

Offshore E&P unit Abu Dhabi Marine Oil Operating Co. (ADMA-OPCO) is concentrating on horizontal drilling to
increase oil productive capacity to nearly 600,000 b/d from an estimated 500,000-550,000 b/d.

Focus is on the company's two major oil fields, Umm Shaif and Lower Zakum.

The company used horizontal drilling extensively in 1993, along with a gas injection program in Umm Shaif and
other fields. It had planned to reach its productive capacity goal by mid-1994.

ADMA-OPCO last year marked progress on the Umm Shaif Thamama gas injection pilot, drilling one producer
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and one injector and installing a wellhead platform. The pilot was to be commissioned in mid-1994, along with a
testing and data gathering program.

Development of the Umm Shaif C reservoir from existing facilities also progressed in 1993, with design and
tender documents for the project being completed. Plans call for installation of seven water injection wellhead
platforms and flow lines to the existing water injection system. Completion is scheduled for April 1995.

The company in 1993 demothballed and recommissioned the Zakum Central main complex's water injection and
power generation facilities to pave the way for peak water injection capacity projected for the field.

ADMA-OPCO also started several multidisciplinary studies to achieve optimum use of surface oil production
facilities in Umm Shaif and improve water injection in Lower Zakum reservoirs.

In addition, ADMA-OPCO recommissioned the Zakum Central main complex in order to boost water injection
capacity in Lower Zakum field.

ADMA-OPCO last year obtained government approval to adopt what it called "revised" development strategies
for the Umm Shaif Arab D and 2akum Thamama IV and V reservoirs. The company's exploration focus is on
processing seismic data in support of the proposed Nasr and Mandous wildcats. Plans also call for a 3D seismic
survey over Umm Shaif.

ADMA-OPCO is spending about $400-600 million/year on continuing development and upgrading of facilities.

More than 70% of ADMA-OPCO's oil production is shipped to Japan, 7% to Southeast Asia, and the rest to
Europe, U.S., Africa, Brazil, and Australia.

Adnoc owns 60% of ADMA-OPCO, which controls a concession of about 8,089 sq km. British Petroleum Co. plc
holds a 14.6% interest in the company, Total 13.4%, and Japan Oil Development Co. 12%.

The other Adnoc affiliate, Zakum Development Co. (Zadco), operates u Zakum, Umm Al-Dalkh, and Satah oil
fields. Adnoc holds 88% of Zadco with the remaining 12% held by a Japanese combine (OGJ, Aug. 16, 1993, P.
62).

ADMA-OPCO kept a fleet of 12 drilling and service rigs busy last year with work for itself as well as for Adnoc
and Zadco.

Since 1989, ADMA-OPCO has drilled 42 horizontal wells--40 producers and two injectors--in Umm Shaif, Satah,
Umm-Al-Dalkh, and the Zakum complex. Of that total, 34 were drilled in Upper Zakum.

Adnoc operating companies in 1993 had a total of 1,041 oil producing wells in operation, of which 501 were
onshore and 540 offshore.

DOWNSTREAM INVESTMENTS

Meantime, to stave off the effects of low oil prices, Abu Dhabi continues a drive to increase investments in
downstream interests outside the U. A. E.

The emirate, through its state owned International Petroleum Investment Corp. (IPIC), last month bought a 20%
interest in Austria's OMV AG energy group for about $450 million.

Austrian Transport and Industry Minister Viktor Klima said OMV's pact opens the door for cooperation between
Austria and U.A.E. in other fields. Although he gave no details of the deal, it likely opens new outlets for U.A.E. oil
exports. OMV, 52% owned by the Austrian government, operates about 800 service stations in Austria and
neighboring countries and the 210,000 b/d refinery at Schwechat, Austria.

IPIC bought a 15% stake in Spain's refining and petrochemical company Cia. Espanola de Petroleos SA
(Cepsa) about 8 years ago in a deal that gave Abu Dhabi two seats on Cepsa's board and allowed it to market
more than 60,000 b/d of crude. The transaction was valued at more than $120 million.
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"These agreements will largely benefit our country as they will boost income and open up new markets for us,"
said Walid al-Muhairi, director general of IPIC.

Abu Dhabi's refining capacity at its two refineries, Umm Al Nar and Ruwais, increased to 214,500 b/d in 1993
after completion of an expansion project at Umm Al Nar that increased crude distillation capacity to 85,000 b/d
from 72,500 b/d.

An upgrade program is under way at Ruwais that will lay the groundwork for a possible expansion of refining
capacity to 250,000-300,000 b/d from 120,000 b/d, but the final approval for expansion has not been given by
Abu Dhabi's Supreme Petroleum Council. Adnoc last year invited companies to submit bids for the $100 million
project.

Copyright 1994 Oil & Gas Journal. All Rights Reserved.

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