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Abu Dhabi Sees Zakum Oil Output Rising Over 40%

Source: Bloomberg 10/20/2009, Location: Middle East

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Abu Dhabi National Oil Corp., the state-run oil producer known as Adnoc, aims to boost crude production at the offshore Upper Zakum field by about 40 percent by 2015 at a cost of more than $13 billion.

Adnoc’s Zakum Development Co. venture is set to raise output from Upper Zakum to 750,000 barrels a day by improving oil recovery at the field, Salah Al-Bufalah, the company’s major projects manager.

The venture, known as Zadco, aims to achieve that level of production for 25 years, allowing it to recover 70 percent of the oil in place, Al-Bufalah said. Zadco plans to build islands to support drilling and production facilities. Abu Dhabi, holder of the majority of the oil and gas reserves in the United Arab Emirates, is seeking to boost output to take advantage of higher crude prices and meet demand that is expected to rise as global economies recover.

The Upper Zakum field, one of the world’s largest, has been producing at a rate of more than 500,000 barrels a day. State-run Adnoc holds a 60 percent stake in Zadco, which operates the Upper Zakum, Umm al-Dalkh and Satah fields. Exxon Mobil Corp. has 28 percent and a unit of Japan’s Inpex Corp. holds the rest. The venture is planning a gas injection project at the Satah field to aid oil recovery, Al-Bufalah said.

Artificial Islands
Building artificial islands will allow Adnoc to cut costs 30 percent from an original estimate of $18 billion, Al-Bufalah said. The original development plan for the field foresaw the construction of 23 offshore production platforms, he said.

Costs for onshore equipment that can be built on the artificial islands are much lower than those for offshore equipment, cutting the project expense, Al-Bufalah said. Adnoc is considering building artificial islands for other projects a second offshore unit is planning to undertake, he said.

Zadco plans to begin tendering construction contracts for Upper Zakum and construction contracts for the Satah project next year. The Satah gas injection project is set to be complete in the fourth quarter of 2013.

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