The United Arab Emirates is on course to achieve its full oil capacity target more than a year earlier than expected.
Abu Dhabi National Oil Co.(ADNOC) is likely to reach its 5 MMbpd goal by the end of next year or early 2026, ahead of the 2027 goal the company had set, according to people with knowledge of the operations. The higher capacity will be a potential source of tension as OPEC and its allies deliberates new production quotas later this year.
OPEC and its partners have been restricting production for years to shore up the market and raise prices. The UAE — which said this month that it had raised capacity from last year’s level — has been eager to use some of its spare volumes. The country has occasionally clashed with OPEC’s de-facto leader Saudi Arabia on the issue, risking a split among the group three years ago, before a compromise was found.
Abu Dhabi is currently producing at about two-thirds of its capability. Its economy is arguably among the most diversified in the Gulf and it faces less pressure to keep oil prices high, though crude remains key to the emirate. OPEC+ is scheduled to review members’ existing capacity levels later this year, and use that to set produciton baseline levels — the starting point from which cuts are calculated — for 2025.
“The UAE is not doing this to generate spare capacity, they’re investing to produce this stuff,” said Ben Cahill, a senior fellow in the Center for Strategic and International Studies. “There’s a tension that is emerging and will be with us for some time within OPEC+.”
ADNOC declined to comment on its capacity target.
Government-owned ADNOC and its partners are ramping up drilling new wells in oil fields and connecting production sites to existing processing stations to squeeze out more out of deposits, said the people who asked not to be named while discussing private, operational matters. ADNOC has outlined a $150 billion spending plan, including on accelerating oil capacity additions, and wants to ensure all of it doesn’t lie idle.
ADNOC’s initial goal was to reach 5 million barrels a day by 2030, before bringing it forward to 2027.
Tags Abu Dhabi National Oil Co. (ADNOC) United Arab Emirates World Oil
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