United Arab Emirates invests to meet 2027 crude oil production capacity goal
Note: Annual data for 2023 represent January through September, the most recent months available.
The United Arab Emirates (UAE) has invested heavily in increasing hydrocarbon production capacity and developing midstream and downstream infrastructure to accommodate future growth in hydrocarbon production. However, over the past 10 years, UAE actual production has averaged just less than 3 million barrels per day (b/d) because of production cut agreements between OPEC and non-OPEC participating countries (collectively known as OPEC+), according to our Country Analysis Brief: United Arab Emirates. The UAE national oil company, the Abu Dhabi National Oil Company (ADNOC), has set a target to increase crude oil production capacity to 5 million b/d by 2027, moving up its earlier 2030 target by three years, according to the Middle East Economic Survey.
To achieve its 2027 goal, ADNOC has increased upstream exploration and development. ADNOC increased planned spending on capital expenditures to $150 billion from 2023 to 2027 and unveiled expansion plans for increasing production.
The UAE is also focused on increasing production capacity in new locations. In 2018 and 2019, the Abu Dhabi, Sharjah, and Ras Al Khaima emirates held several licensing rounds for exploration blocks that were offered for the first time to both domestic and international oil companies.
ADNOC has reported its official production capacity at 4.5 million b/d, according to Energy Intelligence, which is about 0.5 million b/d higher than our 2023 estimate of 4.0 million b/d. However, considerable uncertainty surrounds ADNOC’s ability to sustain production at full capacity. Estimates from other sources such as Energy Intelligence and Rystad Energy are higher, placing the UAE’s production capacity closer to the range of 4.3 million b/d to 4.4 million b/d. Capacity expansion will allow for a significant increase in crude oil production. Should this production increase materialize, we expect that most of that growth will be exported.
The UAE was the seventh-largest total liquid fuels producer in the world in 2022 and the third largest among OPEC countries. The UAE held an estimated 111 billion barrels of proved crude oil reserves at the beginning of 2023, up from 107 billion barrels last year.
The UAE joined OPEC in 1967 and is one of only two members, alongside Saudi Arabia, with notable spare crude oil production capacity to address potential supply shortfalls. Surplus production capacity refers to capacity that is available but is unused because of policy decisions either by individual members or the organization. On June 4, 2023, OPEC+ announced that the group plans to extend its crude oil production targets for participating member countries to the end of 2024. In addition, crude oil production targets for the participating OPEC+ countries would also be adjusted starting in January 2024.
Unlike other member countries whose production quotas were reduced in June 2023, the UAE’s current target increased by 200,000 b/d. However, in the most recent OPEC+ meeting, on November 30, 2023, the UAE also agreed to make an additional voluntary production cut to its stated production targets for the first quarter of 2024 to assist OPEC+’s efforts to reduce global crude oil supply.
This change would, in effect, raise the UAE’s stated crude oil output target from 3.02 million b/d in 2023 to 3.06 million b/d between January 2024 and the end of March 2024. The UAE target would then increase to 3.22 million b/d for the rest of 2024, if the UAE chooses to comply with all agreements made in 2023 and if no further OPEC+ cuts are adopted in 2024.
Principal contributors: Kimberly Peterson, Eric Han