DUBAI – The United Arab Emirates (UAE) is on track to expand its crude oil production capacity to 3 million barrels per day (bpd) by the end of the year, two industry sources said Tuesday. The UAE, one of the world's top oil exporters, increased its production capacity from 2.7 million bpd to around 2.8 million bpd earlier this year and expects to add another 200,000 bpd of capacity over the next few months. "Oil production capacity in the UAE should reach 3 million bpd by the end of this year, and already the current capacity is around 2.8 million bpd," said an industry source familiar with the projects. In July the OPEC country's production was ramped up close to its maximum capacity of 2.8 million bpd, the source added. "The maximum capacity has been tested and everything is going ahead as planned," he said. Abu Dhabi, which has the largest share of the UAE's oil, plans to invest $60 billion over the next five years to boost production capacity to 3.5 million bpd. The bulk of the capacity increase this year will come from the Zakum oil fields, said a second industry source, adding that production at the Murban-Bab field had also increased in 2012 but declining to say by how much. Bab is operated by the Abu Dhabi Company for Onshore Oil Operations (ADCO) concession, which is currently in a tender to renew its deals before they expire in 2014. BP is a partner in ADCO with Royal Dutch Shell, Total, ExxonMobil and Partex Oil and Gas, with ADNOC holding a controlling stake. ADCO is the largest concession, with the capacity to produce between 1.4 million and 1.5 million bpd, and its contract renewal is important to Abu Dhabi's plans to boost its oil capacity to 3.5 million bpd. The concessions system in the UAE allows oil and gas producers to acquire equity shares in hydrocarbon production from the OPEC member in return for investing in projects. The UAE's average oil output in July is estimated to have risen by 0.8 per cent to 2.68 million barrels per day (bpd), latest data from the International Energy Agency (IEA) showed. In June, the IEA estimated the oil-rich Gulf country to have produced an average 2.66 million bpd of crude oil. "Abu Dhabi began commissioning the 1.5 million-bpd Habshan to Fujairah pipeline in early July, a project designed to ship onshore Murban crude 370 kilometers to the northeast, bypassing the Strait of Hormuz. Around 8 million barrels of new crude storage has been built at Fujairah in conjunction with the pipeline, and the line is expected to be operating close to capacity levels by end of 2012," the Paris-based IEA said in a report. – Agencies
