Abu Dhabi’s oil production will climb to 3.1 million b/d by 2024, returning to the 2019 level before the pandemic, compared with 2.8 million b/d in 2020, S&P Global Ratings said in a May 31 report.
Higher oil prices are expected to support a “modest” economic recovery this year, the rating agency said.
Abu Dhabi National Oil Co.’s $121 billion investment plan over 2021-2025 was noted as a driver of economic expansion, with the UAE capital’s real GDP growth seen at 2.2% this year after a 5% contraction last year, according to the report.
ADNOC’s spending represents close to 10% of GDP while Abu Dhabi gets about 90% of central government revenue from the hydrocarbon sector, it noted. The government revenue includes oil taxes and royalties, plus dividends from ADNOC.
“We expect a modest economic recovery in 2021 due to increased economic activity as the effects of the pandemic abate and also due to higher oil prices, which indirectly support real GDP growth,” Ratings said.
The agency said it assumes Brent will average $60/b for the rest of 2021 and 2022, before falling to $55/b in 2023.
ADNOC’s plan to increase oil and natural gas production capacity and downstream activities will support Abu Dhabi’s hydrocarbon sector growth of 2.7% annually through 2024 and non-oil sector growth of 1.7% annually, faster than before the pandemic, according to the report.
ADNOC’s oil output capacity is set to reach 5 million b/d by 2030, from 4 million b/d as of early 2020.
Real GDP will only recover to 2019 levels by 2023 after Abu Dhabi’s population declined by more than 16% over 2018-2020 due to weak economic activity and restructuring and consolidation of several government-related entities, it said.
Abu Dhabi has tried to limit its exposure to geopolitical risks and secure its oil supply to strategic end-users, according to Ratings.
It noted that the government completed the Abu Dhabi Crude Oil Pipeline in 2012, which now has the capacity to deliver about 50% of Abu Dhabi’s oil exports directly to the Fujairah terminal on the Indian Ocean, bypassing the Strait of Hormuz.