US embassy cable - 03ABUDHABI1292

S E C R E T SECTION 01 OF 02 ABU DHABI 001292 
 
SIPDIS 
 
NOFORN 
 
DEPT FOR NEA/RA, NEA/ARP, INR/EC, EB/IEP, 
EB/CBA, S/CT 
AMEMBASSY TUNIS -- HOLD FSI FOR OLIVER JOHN 
USDOE FOR INT'L AFFAIRS -- COBURN, ALSO 
CALIENDO 
 
E.O. 12958: DECL 03/17/13 
TAGS: KPRP, PINR, ENRG, EINV, EPET, ETRD, 
ECON, TC 
SUBJECT:  (C) ABU DHABI'S OIL PRODUCTION CAPACITY (C- 
TN3-00243) 
 
REF A:  STATE 63047 REF B: ABU DHABI 1289 
 
1.  (U) Classified by Ambassador Marcelle M. Wahba, 
for reasons 1.5 (B) and (D). 
 
2.  (S/NF) Summary and comment: In separate meetings 
with Abu Dhabi National Oil Company (ADNOC) CEO Yousef 
bin Omeir and Deputy CEO Abdulla Nasser Al-Suweidi on 
March 17, Econchief was provided an unprecedented look 
at ADNOC's production and surge capabilities.  ADNOC 
can produce up to 2.5 million barrels per day (mmb/d) 
on a sustainable basis and has significant short-term 
surge capacity -- close to 2.8 mmb/d.  We are not 
aware that the ADNOC leadership has ever provided such 
detailed information to the USG before (and indeed, 
securing this cooperation required political-level 
engagement -- see ref B).  That they were so 
forthcoming likely reflects a willingness to assist in 
stabilizing the oil market should that prove necessary 
in the weeks to come.  End summary and comment. 
 
-------------------------------- 
Current Capacity About 2.5 MMB/D 
-------------------------------- 
 
3.  (S/NF) ADNOC CEO Yousef bin Omeir admitted that 
ADNOC is producing at about 2.2 mmb/d, could ramp up 
sustainable production to 2.4 mmb/d almost 
instantaneously, and to 2.5 mmb/d in "a matter of 
days," if necessary.  According to ADNOC Deputy CEO 
Al-Suweidi, ADNOC has the capability to shift 
production from field to field easily.  ADCO (Abu 
Dhabi's onshore production company), for example, had 
ramped up production to 1.35 mmb/d for a couple of 
days last week to help compensate for the total shut- 
down of offshore operations due to dangerously high 
winds. 
 
4.  Al-Suweidi systematically described production 
levels in each of Abu Dhabi's main fields and said 
that ADNOC could sustain 2.5 mmb/d indefinitely under 
current reservoir management policies.  ADMA-OPCO 
currently is producing about 500,000 barrels per day 
and is close to peak production.  The Upper Zakum 
field, operated by ZADCO, is producing about 570,000 
barrels per day and could produce 600,000 barrels per 
day with 15 million cubic feet per day of gas flared. 
ADCO peak sustainable production is about 1.4 mmb/d, 
with the Bu Hasa field accounting for any significant 
production increase.  He noted that, while ADNOC 
usually limits the flaring of gas, it might relax 
those restrictions during a crisis, as it had done 
during the 1991 Gulf War, when more than 50 million 
cubic feet per day was flared. 
 
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Surge Capacity Is Significant 
----------------------------- 
 
5.  (S/NF) ADNOC's leadership is not keen to produce 
above 2.5 mmb/d out of a concern for potentially 
damaging Abu Dhabi's fields and because environmental 
considerations militate against the flaring of gas. 
(Note: ADNOC has a "Zero Flaring" policy, but since 
GASCO, the local gas processing company, does not have 
the capacity to manage the additional associated gas, 
higher oil output would require the flaring of the 
excess gas.  End note.)  The ExxonMobil Country 
Manager here (please protect) previously confirmed to 
Econchief that ADNOC could surge to at least 2.6 
mmb/d, if needed.  Al-Suweidi said, however, that 
ADNOC's short-term surge capability at the well-head 
could be as much as 20 percent more than peak 
production, suggesting a surge capacity closer to 2.8- 
3.0 mmb/d. 
 
6.  (S/NF) Al-Suweidi acknowledged that while ADNOC 
could hypothetically reach 3.0 mmb/d at the well-head, 
being able to actually move, process, and export that 
amount would require significant investment to 
increase the capacity of the surface facilities (i.e. 
the collection and processing facilities).  He said 
that ADNOC's shareholders were not keen to invest in 
additional spare capacity at this time, but it is 
technically feasible nonetheless. 
 
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Other Factors Affecting Output 
------------------------------- 
 
7.  (S/NF) There are only a few other factors that 
could hinder ADNOC from ramping up production 
instantaneously in a crisis.  The weather sometimes 
prohibits full production from the offshore 
facilities, as was demonstrated last week.  To take 
advantage of current high oil prices, ADNOC has 
deferred scheduled maintenance in the near-term that 
could affect the production of any one field. 
Although we don't know to what degree higher insurance 
premiums on tankers could affect ADNOC's ability to 
put additional production on the market, Al-Suweidi 
confirmed that ADNOC sells its oil FOB (free on board 
-- customers provide their own tankers) and the 
availability of tankers is outside of ADNOC's control. 
Finally, ADNOC would have to receive specific 
instructions from the Supreme Petroleum Council (SPC) 
to increase production significantly above current 
levels.  Al-Suweidi undertook to inform us of any 
change in the current situation that would affect the 
UAE's production capabilities. 
 
Wahba