REDDEN, Contributing Editor
Though acting more like
an outlier of late, Saudi Arabia nonetheless continues to wield the juice that
comes with being the de facto leader of the OPEC+ alliance.
If oil prices refuse to cooperate, the Saudis
had hinted their voluntary 1.0-MMbpd production cut—extended until the end of
2023—could go further. However, with tension
simmering anew across the Middle East with the Hamas Oct. 7 attack on Israel, the possibility of a regionwide escalation of the
since-declared war is testing the sustainability of any production cut
Regional OPEC members Iraq, the UAE and Kuwait initially fell in line,
along with affiliate Oman, in agreeing
to pull between 211,000 and
400,000 bpd off the global market.
Prior to the attack by Hamas, which the U.S. and others have designated a
terrorist group, production data suggested the Middle East as a
whole was heading in a different direction.
In the latest OPEC monthly market report,
Saudi Arabia's 943,000-bpd reduction in average July production was, by far,
the steepest drop within the 13 member countries and the only decline reported among
the Middle East membership.
Saudi Arabia needs up to
$100/bbl, analysts say, to shore up its
budget and help fund ambitious internal programs. Brent crude settled at $90.89/bbl on Oct. 13, rising 6% upon then-reports of an impending Israeli ground attack on the Hamas stronghold
in the Palestinian Gaza Strip.
2022, Middle Eastern oil and condensate production, excluding Egypt, increased
year-over-year 12.6% to an average 27.877 MMbpd (Table 1), according to World Oil’s mid-year forecast data.
However, according to the Energy Institute's 2023 "Statistical Review of
World Energy” (After a more than 70-year run, BP ceded the yearly statistical review to the EI this year),
aggregate gas production reached a 10-year high of 69.79 Bcfd in 2022 (Table 2). This was fueled largely by
increasing domestic consumption and continuing efforts to offset the shortfall
caused by OPEC ally Russia's war with Ukraine.
all indications, the upward trajectory in gas production will carry over this
year and beyond, with Wood Mackenzie forecasting a nearly 20% increase by 2030.
"The Middle East can be part of the
solution for the global gas markets, as the region continues to ramp up
production from its gigantic gas reserves,” Alexandre Araman, principal analyst
for Middle East Upstream, said on May 3. “To fulfill the level of production
growth we have predicted, investments in non-associated gas projects are set to
reach a record US$25 billion this year and a cumulative total of US$120 billion
by the end of the decade.”
the drilling side, regional demand for land rigs is expected to grow 25%
between 2023 and 2027, the Westwood Global Energy Group said in a May 17
analysis. Nabors Industries, Houston, will have five new rigs at
work in Saudi Arabia over the course of 2023, with five more under
construction, as part of a 50-rig joint venture with Saudi Aramco, President and CEO Anthony Petrello said on July 26. The UAE's ADNOC Drilling has stepped up a newbuild program,
to increase its operated fleet from the current 115 rigs to 142 rigs by the end
of this year or early 2024, Fig. 1. Activity likewise is picking up in the Persian
Gulf, the deepwater Eastern Mediterranean and elsewhere, with 177 jackups and floaters
under contract as of Oct., 12, up by 31
offshore rigs year-over-year, according to S&P Global's Petrodata.
of the outbreak of the new hostilities, a country-by-country review of recent activity
showed OPEC members and non-members alike advancing a number of promising
conventional and unconventional plays.
OPEC-reported production falling to 9 MMbpd in July, down from just over 10.1 MMbpd
to close out the second quarter, Saudi Arabia exports dropped to roughly 5.6 MMbpd
in August (Fig. 2)—its lowest level
since March 2021, according to a Bloomberg analysis. The Kingdom intends to
keep oil production at around 9 MMbpd for the rest of the year. Aside for voicing support for the Palestinian territories, the Saudis
remained neutral in the Israeli-Hamas war, as of Oct. 14. Despite
interim production cuts and longer-range plans to move away from an
oil-dominant economy, Saudi Aramco is
spending heavily to increase oil production capacity to 13 MMbpd by 2027 and
expand gas production by more than 50%, by 2030. "We are maintaining the largest capital spending program in our history,
with the aim of increasing our oil and gas production capacity and expanding
our downstream business," said Aramco President and CEO Amin
H. Nasser in an Aug. 7 release.
is pressing ahead with development of a major unconventional onshore gas play,
while at the same time working to squeeze a cumulative 550,000 bpd
of incremental production from the aging Marjan and Berri Persian
Gulf fields. The company says it also is on track to begin producing the onshore
Jafurah field—the Kingdom's largest non-associated unconventional gas play—by
2025. The field is expected to reach a sustained rate of 2 Bcfd by 2030.
Israel's second-largest gas production field quickly became a casualty of the war. Owing to security concerns, the government ordered the Chevron-operated Tamar field, located in the deepwater Mediterranean some 12 miles from the Gaza Strip, to temporarily shut down two days after Hamas' murderous assault. With production capacity of around 1.1 Bcfd, Tamar has been online since April 2013.
Elsewhere, the Energean plc-operated Karish field commenced production a year ago this month and with a capacity expansion underway, year-end production is on track to reach 140,000 to 155,000 boed. A second export riser and the Karish North flowline were delivered in March, to connect the production network on the Energean Power floating production storage and offloading (FPSO) unit to the pipeline to shore.
Karish's 1.75-Tcfg resource base, however, pales in comparison to Leviathan and Tamar fields in the eastern Mediterranean Levantine basin, with estimated reserves of 35 Tcfg and 7.1 Tcfg, respectively. Operator Chevron and Israeli partner NewMed Energy (45.34% interest) made a final investment decision (FID) on July 3 to increase Levantine gas throughput capacity from 1.2 Bcfd to nearly 1.4 Bcfd. The new gathering pipeline is expected to be in operation by the second half of 2025.
"We're working toward a concept for the next expansion of Leviathan, ideally by the end of this year, and floating LNG is one of the concepts that we continue to look at," Chevron CEO Mike Wirth said in a July 28 earnings call.
Meanwhile, BP and Abu Dhabi National Oil Co. (ADNOC) say their $2 billion bid to acquire a 50% stake in NewMed Energy remains on track, despite the escalating war, according to a Reuters report on Oct. 11.
Arab Emirates says no additional production cuts are in its future, beyond the
estimated 144,000-bpd reduction agreed to in May. For now, OPEC's third-largest
producer is going full-bore on plans to ramp up to 5 MMbpd, compared to the production
just under 2.9 MMbpd reported to OPEC in July.
a jump on its strategy to increase oil production capacity, state-owned ADNOC teamed up last December
with Malaysia's Petronas to help develop an
estimated 22-Bbl onshore unconventional oil prospect, on Block 1 in the Al
For now, however, gas has taken
center stage, as highlighted by the $10-billion expansion of the Al Hosn processing plant for the onshore
Shah sour gas-condensate field ADNOC operates jointly with Houston's Occidental Petroleum Corp. The
expansion increases the field's production from 1.0 Bcfd to 1.45 Bcfd.
"The Al Hosn
expansion came online two months earlier than planned, " Occidental
President and CEO Vicki Hollub said in an Aug. 3 earnings call. "We have
now successfully expanded the plan in stages, from 1.0 Bcf a day to 1.45 Bcf a
day for a very small incremental capital investment."
Hosn netted Occidental—which holds interest in 2.5 million gross acres—88,000
boed in the second quarter, including a record 289 MMcfd of gas production.
however, may fall short of a 2025 target date to begin production of more than
1.5 Bcfd from the world's largest offshore sour gas development. The April
termination of two principal onshore and offshore pre-construction services
agreements for the Hail and Ghasha development has cast uncertainty over the
multi-billion-dollar project. While providing no reason for the cancellations,
ADNOC proceeded to launch a fresh tendering round for the so-called Ghasha
mega-project within the Marawah Marine Biosphere Reserve, west of Abu Dhabi
to reduce oil production by 211,000 bpd, but the country already had been
producing below its 4.22 MMbpd OPEC quota, according to S&P Global. Based
on OPEC secondary source data, Iraq was producing just over 4.2 MMbpd by July,
representing a 41,000-bopd increase over the prior month.
second-largest producer also sustained an estimated 450,000-bopd shortfall from
the March closure of the main export pipeline in the Kurdistan region to the
north. The Iraq-to-Turkey takeaway network was shut down over a pay dispute,
and while talks continue, the pipeline remained shut down in mid-September.
closure has been particularly tough for Norway's DNO ASA, which has taken a spectacular hit in its Tawke and
Baeshiqa licenses. Cumulative net oil production from the Kurdistan concessions
in the second quarter fell precipitously from 70,947 bpd in the first quarter
to 41 bpd. The takeaway closure forced the company to lay down three previously
active rigs and reduce staff levels.
began partial production from Tawke field on Aug. 17, selling around 40,000 bpd,
reportedly at a steep discount, to the Kurdistan Regional Government (KRG) and
local traders. The nearby Peshkabir field remains shut-in.
"While there is no certainty regarding the reopening
of the export pipeline, we anticipate an increasing reliance on truck transport
for our Tawke field shipments under a pay-and-load framework," said DNO
Executive Chairman Bijan Mossavar-Rahmani.
Near the Kuwaiti border in the Basra region
to the south, Iraq also is engaged in expanding the production capacity of the
world's third largest conventional oil field. The Iraq Oil Ministry plans to
boost production at the 69-year-old Rumaila field by 300,000 bpd over the next
In an effort to reduce flaring at
the super-giant field, the first phase of a liquefied natural gas (LNG) plant was
inaugurated on June 1, designed to process up to 200 MMcfd of associated gas
that will be directed to power plants and other local consumers.
the 10 non-member affiliates of the OPEC+ regime, Oman agreed to a
comparably modest 40,000-bpd cut, which was reflected in second-quarter oil
production falling slightly to 1.051 MMbpd, says the Middle East Economic
Survey (MEES). First quarter crude production averaged 1.064 MMbpd,
matching the year-end 2022 output.
Oxy recently put an
onshore near-field oil exploration well on production on Block 65, following
the highest initial production (IP) rate in a decade. After delivering a
24-hour IP rate of 6,000 boed, the onshore well went online in the second
quarter, less than one month after completion.
have incremental opportunities in Oman for additional wells that are similar to
that in Block 65," says Oxy's Hollub. "In Safah field in the north of
Oman, we've set the production records there, and that's a field that's been in
operation for over 40 years. So, we're still finding new things to do
Through a joint venture
with Oman Oil Co. Exploration and Production (OOCEP), Oxy Oman has interests in 6 million
gross acres in five blocks, where it netted second-quarter production of 67,000
boed after closing out 2022 with average gross production of 220,000 boed. Oman's cumulative gas production in
the second quarter was up 2.3% from the same 2022 quarter to just under 925
Bcf, according to the Muscat-based National Centre
for Statistics and Information (NCSI). Exports reached a monthly high of 1.08 MMtons in March, after shipping out a yearly record 11.58 million tons
of LNG last year.
reported completion of a debottlenecking project at the LNG export terminal at
the Port of Qalhat in Sur raised capacity by 1
million ton/yr and
coincides with the signing of three major supply contracts in August, including
a four-year agreement on
Aug. 31 with the German-run Securing Energy for Europe
(SEFE) that calls for the supply of 400,000
Operator Eni and equal partner BP plan to drill
a tight gas exploration well this year on Block 77 in central Oman, hoping to
replicate BP's flagship development some 19 mi to the west. As the Middle
East's largest tight gas play, the BP-operated Khazzan and Ghazeer fields on Block 61 are
reportedly producing at a record 1.5 Bcfd.
is a paradox, in that while agreeing to cut 128,000
bopd, it is actively engaged in trying to maintain the 2022 reversal of once-sagging
oil production rates. Energy Institute statistics show crude production
rebounding from three years of decline to 3.028 MMbpd, a 12% increase over
2021, but still well below the 10-year high of 3.173 MMbpd.
State-owned Kuwait Petroleum Co. (KPC) has set an oil
production target of 3.5 MMbpd by 2025, mainly through an aggressive offshore
drilling campaign and pulling more oil from the graybeard Greater Burgan field.
at the Oxford Energy Seminar on Sept. 12, 2022, CEO Shaikh Nawaf Saud Al-Sabah said secondary and tertiary recovery
techniques have effectively stemmed the natural declines at Burgan and
elsewhere. "Like those of every major producer that has been in
this business for the past eight decades, our fields are starting to age. That age, however, is mostly over,"
Meanwhile, KPC subsidiary Kuwait Oil Co. has taken delivery of a second rig in September in preparation
for the next phase of an inaugural drilling campaign in Kuwait's woefully
underexplored Persian Gulf. The newbuild Oriental Dragon jackup
will join sister rig Oriental
Phoenix currently drilling offshore Kuwait, which kicked off its
long-delayed six-well exploration program in late 2022. The KPC chief has
predicted the undeveloped continental shelf could eventually provide some 25%
of Kuwait's total oil production.
threat to the OPEC game plan, Iran intended to increase oil production to 3.4 MMbpd
by the end of September, continuing a drive that has boosted production by
around 50% over the past two years, Bloomberg reported on Aug. 22, quoting Oil
Minister Javad Owji's comments to the Iranian parliament's energy committee.
Owing to continuing U.S.-led sanctions over its nuclear program, the
Islamic Republic is exempt from OPEC
quotas, allowing unfettered production with no blowback. A Hamas ally, Iran
could face additional sanctions if found to be complicit in the surprise attack. The
August OPEC report had Iran producing 2.828 MMbpd in July, based on secondary
sources, which would represent a 68,000-bpd increase over the prior month. With
production closing in on the reported 3.8-MMbpd capacity, exports have risen
steadily, largely under the radar and mostly to China, Persian language news
outlet Iran International reported on Aug. 23. Iran oil and condensate exports reportedly
averaged a 2023 monthly high of more than 2.2 MMbpd in the first 20 days of
initiatives aimed at increasing production, state-owned National
Iranian Oil Co. last year reportedly
planned to add 420 new producing and injection wells to the massive
Azadegan onshore field, bringing it from 190,000 bpd to 380,000 bpd. Sister
entity Iranian -Offshore Oil Co., likewise, is engaged in restoring Persian Gulf fields (Fig. 3) to pre-sanction levels, though
no updates have been made available.
Chinese NOC Sinopec in April became the sixth international entity to grab a stake
in Qatar's $30-billion North Field East (NFE) LNG expansion project, Fig. 4. With its 5% interest, Sinopec joins Shell, TotalEnergies, Eni, Exxon
Mobil and ConocoPhillips as
partners in the project that, when completed in 2026, will lift LNG processing
capacity from 77 Mtpa to 110 Mtpa, says state-owned Qatar Energy.
The NFE expansion and the subsequent
North Field South (NFS) project, will, together, increase Qatar's LNG
production capacity to 126 Mtpa. The two-phase project collects feedstock from
the Persian Gulf North Field, the world's largest non-associated natural gas
"By 2029, about 40% of
all new global LNG supplies will be provided by Qatar Energy projects,"
President and CEO Saad Sherida Al-Kaabi said in a July 19 presentation to the
12th LNG Producer-Consumer Conference in Tokyo.
A one-time OPEC member, Qatar has
shifted its focus from oil to gas and, in 2022, produced a cumulative 10-year
high of 178.4 Bcm, according to the EI. A U.S. Energy Information Administration
(EIA) analysis of LNG shipments over the first half of 2023 ranks Qatar third,
with an average of 10.4 Bcfd, behind the U.S. average of 11.6 Bcfd and
Australia's 10.6 Bcfd.
run as being among the fastest-growing LNG exporters among the Organization of
Arab Petroleum Exporting Countries (OAPEC) has come to a screeching halt.
shipping out 1.9 million tons in the first quarter, according to OAPEC, exports
from the Idku and Damietta LNG terminals
were suspended in June, to meet rising domestic demand from the summer heat
Ministry of Petroleum and
Mineral Resources says shipments will resume in October, but analysts say low
prices and increasing internal consumption make it doubtful the country will
return to previous levels. Exports averaged 3.5 million tons over the first
half of FY2022, after reaching a 10-year high of 6.8 million tons the year
prior. The curtailment of Tamar production has reduced
Egypt's imports of Israeli gas to around 650 MMcfd, according to Bloomberg.
The LNG export picture mirrors the
drop in cumulative gas production, which fell to a three-year low in the first
five months of 2023, according to Reuters. At the same time, government
officials have set a 2023 oil production target of 650,000 bpd, up from the average
613,000 bpd produced last year, according to EI statistics.
Much of that expected increase will
come from the Western Desert, where premier leaseholder APA Corp., Houston, is on track to produce 154,000 bpd this year.
Second-quarter production of 144,026 boed (61% oil) was up from 143,536 boed,
produced in the like 2022 period.
are projecting gross oil production will be up 5% in the third quarter, to
148,000 barrels per day. And we are making good progress toward our
fourth-quarter guide of 154,000 barrels per day," President and CEO John
Christmann said in an Aug. 3 call.
which has a 5.3-million-acre position in six separate concessions, averaged 17
rigs in the second quarter, drilling and completing 32 wells.
in the Western Desert, Canada's TAG Oil
Ltd. is emerging as a significant player, as it begins development of an
unconventional reservoir that its CEO says mimics the South Texas Eagle Ford
and the home country Montney shales, Fig.
5. The Vancouver-based independent recently began drilling its first
horizontal oil well at Badr (BED-1) field, targeting the Abu-Roash F (ARF) carbonate
reservoir, at a programmed TVD of around 10,827 ft. The well is expected to be
completed by the fourth quarter.
BED4-T100 well follows the May recompletion of a vertical well that flowed more
than 500 bbl during a short flowback. TAG has plans for three to four
horizontal wells in 2024 within the 26,000-acre play.
"We’re very excited about the scope
and scale of the ARF and the fact that it’s a relatively new play. A recent
resources evaluation report prepared by RPS Energy Canada Ltd. estimates that
there is potentially more than 500 million barrels of oil-initially-in-place in
the ARF, and to date, the zone has never been developed in Egypt," said
CEO Toby Pierce.
the UK's Energean plc says three new offshore development
wells will go online by year's end at its wholly owned North El Amriya and North Idku (NEA/NI) concessions in the
Western Nile Delta, pushing production to 40,000 boed. The operator eyes FY2023
production of between 28,000 and 32,000 boed, after averaging 26,500 boed in
July, as two wells came online in the NEA and NI concessions located near the
Abu Qir gas fields in the Mediterranean Sea.
five significant Eastern Mediterranean gas discoveries, Cyprus is still waiting
for the first molecule to hit burner tips.
Chevron-led consortium is in a holding pattern, after the government's Aug. 25
rejection of an initial development plan for the deepwater Aphrodite field in the Levant basin.
Cypriot Energy Minister George Papanastasiou has blamed the
omission of a mutually agreed floating gas processing plant in the plan for the
parties are talking, but as of mid-September, the impasse had not yet been
resolved. Speaking to analysts before the development scheme was rejected, the Chevron
CEO said, "In the Eastern
Med, our Aphrodite appraisal well in Cyprus met our expectations, and we've
submitted a development concept to the government. Eastern Med is a very strong
The Aphrodite reservoir is estimated
to hold recoverable reserves of 4.5 Tcf. The initial production phase was
expected to comprise five production wells, capable of producing up to 800 MMcfd.
Chevron mobilized the Stena Forth drillship
in May to begin drilling a third appraisal well.
Chevron has a 35% operating interest
on Block 12, with partners Shell (35%) and NewMed Energy (30%).
Off the southwestern coast, 50-50
partners Eni (operator) and
TotalEnergies plan to spud an
appraisal well by the end of the year on Block 6, to further delineate the
estimated 2.5-Tcf reserve estimate for the Cronos discovery well. Along with
the Cronos-1 discovery, Block 6 is also home to the Calypso-1
gas discovery and the December 2022 Zeus-1 discovery well that encountered just
under 345 ft of net gas pay in carbonate reservoirs.
State-owned Tatweer Petroleum has hit pause on
developing a major offshore shale prospect and has returned to its known
conventional assets. The NOC wrapped up 2022 with 10 new wells on the onshore
Khuff gas field and added 73 wells in a continuing program to slow down the decline of the 90-year-old
Bahrain field, which peaked at 79,000 bpd more than 50 years ago.
Tatweer is focused on developing two deep gas
discoveries, targeting the Al-Juba and Al-Jawf
unconventional reservoirs. The
prospects—which could hold some 10-20 Tcf of reserves—lie beneath
the onshore Al-Khuf and Al-Onaiza gas fields. Tatweer drilled one Juba and
two Jawf exploration wells last year.
Tatweer, for now, has put the brakes on developing the
al-Bahrain unconventional prospect off the west coast, estimated to hold at
least 80 Bbbl of tight oil.
stalemate—albeit a tenuous one—in the nearly 10-year civil war has done little
to ease Yemen's flagging oil and gas prospects.
perennial also-ran among Middle East producers, Yemen's four-year decline in
oil and condensate continued in 2022, falling to a miniscule 53,000 bpd, while
gas barely registered with aggregate production of 0.1 MMcf—unchanged in five
years. The shuttered LNG export terminal at the Gulf of Eden remains in force
Zenith Energy Ltd. on Sept. 4
terminated an earlier agreement to pay just over $21.6 million to acquire OMV's stakes in three blocks. WO
Lead Photo: Left: Saudi Arabia's nearly 67-year-old Safaniya field remains the world's
largest conventional offshore field. Image: Saudi Aramco; Middle: An Energean rig drilling ahead in Egypt's
Upper Desert. Image: Energean Plc.; Right: The drillship Stena
Forth is drilling an appraisal well off Cyprus. Image: Stena Drilling Co.