Energy efficiency to prove new focus for UAE's Oil and Gas industry

Current proven oil reserves remain at approximately 97 billion barrels, meaning the UAE's oil fields represent approximately 7% of global reserves (while the GCC accounts for 45%): the Emirates are therefore in the top-10 amongst Opec producers.

The UAE currently exports 2.32 million barrels of crude oil per day - mainly to Asian markets with Japan at the forefront - and in terms of natural gas, the UAE's reserves stand at six trillion cubic metres (tcm).

According to a May 2012 Business Monitor International (BMI) report, these UAE oil reserves will decrease by 5.8 billion barrels from 96.8 billion (2011) to approximately 91 billion barrels by 2016, mainly due to an increase in oil production and projected exports. By 2016, BMI estimates that oil production will rise to more than 3.2million barrels per day (mbpd), increasing to 3.5 mbpd by 2021. This increase is supported by a number of factors, including mature oil field redevelopment and the introduction of enhanced oil recovery (EOR) which will maximise current reserves, as well as renewed investment from oil companies both domestically and internationally. Likewise, gas reserves are set to fall from six tcm to approximately 5.8tcm by 2016.

Reserves affected by upswing in local demand

Oil and gas reserves are also being affected by increasing domestic use by Gulf states, including the UAE, particularly during the desert heat of the summer months when energy consumption typically spikes. This has been driven both by demand and a growing population, according to a February 2012 Oliver Wyman report.

Despite its reserves, natural gas no longer meets domestic energy demand, forcing the region's countries to dip into their oil reserves and consequently negatively impact revenue generation. In 2010, the UAE was found to be the biggest energy consumer in the region, second only to Saudi Arabia, with a record 1.478 equivalent bpd of oil being used.

However, Introducing and implementing energy efficiency technologies has the potential to save the UAE Dhs11bn ($3bn) a year in energy costs, the Oliver Wyman report states (assuming constant electricity production costs). These savings could be found in the residential sector (approximately 51%), the commercial sector (approximately 38%) and the industrial sector (approximately 11%).

"Growing energy consumption in the Middle East threatens to sap the region's competitiveness and economic growth. Even a moderate adoption, however, of measures used elsewhere in the world to increase energy efficiency could significantly reduce investment needs for energy infrastructure, slow the pace of energy consumption growth, free-up oil for export and help mitigate pollution and the region's carbon footprint," the report concludes.

Projects coming online to increase efficiency

Abu Dhabi is home to one-third of the top-20 largest oil and gas projects in the region, including the delayed 400km Habshan-Fujairah pipeline, which was completed in May 2012 and is due to start pumping by August 2012. The pipeline is set to allow the capital to export its oil from the strategically-placed emirate of Fujairah on the East coast, bypassing the Strait of Hormuz. Initially designed to carry 1.5 million bpd, it will later expand to transport 1.8 million bpd.

The Dhs37bn ($10bn) Shah sour gas field project in the capital's Al Gharbia (formerly the Western Region) is on track for completion in 2014, producing natural gas condensate and natural gas liquids (NGLs). Shah is set to produce one billion cubic feet of gas a day when up and running.

When complete, the exploitation of this field is set to address the rising energy demands of the UAE, while future export projects are due, in turn, to meet increasing global energy export demands.