07-08-08 Abu Dhabi, the largest sheikhdom in the United Arab Emirates and owner of the world's fifth-biggest oil reserves, will spend $ 20 bn to raise crude production by 30 % in the next two years.
"Forecasts of strong global demand for oil in the long run coupled with diminishing supplies has prompted the emirate to allocate investments of up to $ 20 bn to raise its oil production capacity to 3.5 mm bpd by 2010, up from 2.7 mm bpd at present,'' the Abu Dhabi Department of Planning and Economy said. The oil industry accounted for 241 bn dirhams ($ 65.6 bn) of Abu Dhabi's 400 bn-dirham national income last year. Oil sales represented 92 % of government revenue, the report said.

It is unlikely that the UAE, the third-largest member of the Organization of Petroleum Exporting Countries, will be able to raise oil output by some 800,000 bpd in such a short time even with its budget, said Ross Cassidy, a Middle East research analyst at Wood Mackenzie Consultants.
"I don't think it is possible -- a goodfew oil projects would have to contribute to such a target and with the shortage of materials and labour, the whole industry is suffering from delays,'' Cassidy said from Edinburgh. "We predict a slight increase of maybe 100,000 bpd by 2010.''
The UAE produced 2.65 mm bpd in July, according to estimates.

IEA estimate
The International Energy Agency (IEA), the energy adviser to 27 nations, expects the UAE's production capacity to reach 2.82 mm bpd in 2010, according to its Medium-Term Oil Market Report published in July. The country won't reach 3.5 mm bpd until 2019 at the earliest as field expansion costs double and supplies of natural gas, which the UAE uses to re-inject into ageing oil reservoirs to push more oil out, fall, the IEA said.
Abu Dhabi will continue to base its economic development on the hydrocarbons industry, the report said, even as it acknowledged that price fluctuations leave little financial control in the hands of the government.

Oil prices touched a record $ 147.27 on July 11, more than doubling from a year earlier. It has fallen 17 % since then, and was trading at $ 120.92 a barrel.
The manufacturing industry, consisting mainly of oil and gas-related activities such as petrochemicals production, was the second-largest contributor to Abu Dhabi's gross domestic product, representing 10 % of national income in 2007, the report said.