New UAE Gas Field Promises Self-Sufficiency

UAE may become an even bigger player in the gas markets in the near future.

In what has been billed as the biggest discovery of its kind in more than a decade, the United Arab Emirates last month announced the uncovering of a major new gas field at Jebel Ali, on the border between Abu Dhabi and Dubai. The discovery of an 80 trillion standard-cubic-foot gas field could make the UAE, which has the world’s seventh largest gas reserves, a net gas exporter and bolster its chances of attaining self-sufficiency, analysts say. It could also throw a lifeline to Dubai’s economy, which is reeling from the impact of a real estate slump and large debts accumulated by government-related entities. 

The find is also noteworthy for the field’s potentially low recovery costs in the face of intense competition in international gas markets. “The shallow nature of the find will mean development costs will be much lower than some of Abu Dhabi’s sour gas resources,” says Liam Yates, an ana-lyst on Wood Mackenzie’s Middle East upstream team. “The find ranks as the largest global gas discovery since the Galkynysh field in Turkmenistan in 2005.”

While the Jebel Ali field is a priority for development, final timing depends on where it fits in with the UAE’s gas market, Yates cautions. Large volumes of gas are associated with oil production, which is on the rise despite a fall in oil prices since the beginning of the year; low gas prices and the costs associated with collecting it sometimes leads companies to release it into the atmosphere to reach the crude oil beneath the surface.

In a statement, Abu Dhabi National Oil Company (ADNOC) said it joined with Dubai Supply Authority in an agreement “to continue to explore and develop the shallow gas resources in this area in a joint project named Jebel Ali.” ADNOC is pushing ahead with other gas developments, such as the Hail and Ghasha projects located offshore of Abu Dhabi.

The Jebel Ali find may also have a geopolitical impact. The UAE currently imports gas from Qatar through the Dolphin gas pipeline, despite a blockade by the UAE, along with Bahrain and Saudi Arabia, which accuse Doha of supporting terrorism. But Qatar and the UAE maintain the agreement in the face of the dispute, a situation that Yates expects will continue.