No Easy Oil

How would you describe the relationship between BP and its joint-venture partner Abu Dhabi National Oil Company (ADNOC)?

From BP’s perspective, our partnership with ADNOC has been very successful. Through our enduring relationship, we have helped to establish a world-class oil industry and a set of high-quality assets in which we have invested for many years, delivering oil production and revenues. BP has played a significant role in the Abu Dhabi oil industry since the 1930s and was at the forefront of the discovery of oil in the Emirate in 1958. Our partnership with Abu Dhabi has endured over seven decades, contributing to the growth of the nation, while providing value to BP. Our shareholdings in the country’s operating companies contribute a significant share to BP’s worldwide production. Today, our interests in Abu Dhabi include shareholdings in the Abu Dhabi Marine Operating Company (ADMA-OPCO) (14.67%), the Abu Dhabi Company for Onshore Oil Operations (ADCO) (9.5%), the Abu Dhabi Gas Liquefaction Company (ADGAS) (10%), the Natural Gas Shipping Company (NGSCO) (10%), and Bunduq Company Limited (3%). BP seconds a number of specialists to provide technical and managerial support to ADNOC and the operating companies. We also invest in developing local capabilities, by, among other means, seconding national staff to different BP locations.

How can international and local companies work together to further develop the oil and gas sector?

One obvious area is partnership through joint-venture companies. ADCO is an onshore company that handles one of the oldest concessions in the world. It is 75 years old, and BP has also been there from day one. Historically, most of the nations in this part of the world had little capability and lacked good technical education programs. Over the past 30-40 years, the growth of the energy sector in Abu Dhabi in particular has improved dramatically. The UAE now has fantastic capability in running huge operations. However, challenges remain as the era of easy oil and gas extraction is almost over, and thus sustaining and increasing production are becoming more difficult. There are people who can still manage the situation, but we need the right technology and know-how to extract difficult resources. That is why joint ventures and collaboration are so important. One company works to bring together resources and people, while the other might specialize in contributing technology, know-how, and expertise.

What effect is US shale gas and Venezuelan oil having on the market?

The US shale energy revolution is obviously an important development. Technological innovation and supportive industry regulation have unlocked vast unconventional resources in the US, reversing the trend of falling output and altering global energy balances. Shale gas growth will gradually spread beyond the US. In BP’s recently published Energy Outlook 2030, we see shale gas as the big growth story in OECD countries, providing more than enough gas to meet the projected increase in OECD gas demand. However, despite all the attention surrounding the shale gas revolution, in volume terms the bigger story with gas is the expansion of mostly conventional production in non-OECD countries, with the Middle East being the largest contributor.

With oilfields maturing and enhanced oil recovery methods, how can BP contribute to the growth and development of the UAE’s energy sector?

BP is helping ADMA-OPCO to implement what we call the “digital oilfield” in brownfields and new developments that bring in technology to help increase production efficiency, increase recovery factors, and improve safety. We have worked with ADNOC to study the use of carbon dioxide in enhanced oil recovery within ADCO’s North East Bab fields. We have also been supporting the Abu Dhabi Petroleum Institute in developing its enhanced oil recovery research capability. More broadly, BP has great expertise in advanced seismic imaging to help optimize reservoir productivity. BP leads the industry in a new wave of enhanced oil recovery technologies.