Adipec 2015: European players upbeat on prospects for Abu Dhabi’s gas sector

European oil majors such as Shell and Wintershall are upbeat about Abu Dhabi’s gas sector.

"The region needs gas," said Mario Mehren, the chief executive of Germany's Wintershall. "And Abu Dhabi has huge potential."

Natural gas is important for the UAE as it fuels 98 per cent of the country’s power generation. And although the UAE produces the commodity, it uses a large amount as feedstock for the petrochemical industry and to reinject into oil plays for higher rates of production.

Demand for reinjection is expected to grow by 150 per cent to 45 billion cubic metres (bcm) in 2020 from 18 bcm in 2008, according to a report from the consultants PwC.

Wintershall announced yesterday that it had “positive” results from its first onshore appraisal well on the Shuwaihat field, 25 kilometres west of Ruwais.

“Overall it’s meeting our expectations and we’re encouraged to continue drilling,” he said.

The company expects to release its findings at the beginning of next year, and if producing, the Shuwaihat field would be Wintershall’s first asset in production in the region.

“First our main target is to set up production, then we can see how we can grow and leverage our position [in the region],” said Mr Mehren.

Mr Mehren declined to give specifics as to the appraisal, but said that the field was not as large as the Bab gasfield, which will yield 520 million cubic feet of gas per day.

Abu Dhabi’s Bab field, about 150km south-west of Abu Dhabi city, is the largest onshore field in the emirate. The gas contains a high amount of hydrogen sulphide – 34 per cent – which is not only difficult to process but also costly. However, that is not slowing down gas extraction in the emirate.

​Staff numbers at the field operated by the long-time Abu Dhabi player Royal Dutch Shell have increased, at a time when the company posted a US$7.4 billion net loss last quarter and made more than 7,000 job cuts across its operations.

“We brought a number of people on to Bab while tailing back in [other operations],” said Andrew Vaughan, vice president of Shell Abu Dhabi, declining to give specific figures.

“Gas is a very important fuel for the UAE and they’re on a growth track as far as industries and operations,” said Mr Vaughan.

Follow The National's Business section on Twitter