Save for later Print Download Share LinkedIn Twitter Ramping up oil and gas production while pursuing a low-carbon energy transition agenda might appear to be contradictory (PIW Jan.29'21). But Abu Dhabi, holder of almost all the United Arab Emirates' hydrocarbon reserves, believes the two goals aren't mutually exclusive. State giant Abu Dhabi National Oil Co. (Adnoc) plans to increase oil production to 5 million barrels per day by 2030 from around 4 million b/d today, while also fixing to become self-sufficient in gas output by the end of the decade. Adnoc argues that oil and gas demand won't fall off a cliff anytime soon, and Abu Dhabi's low-cost, low-carbon production gives it a competitive advantage over its rivals -- even in a post-Covid-19 world where demand is increasingly constrained by the transition over the coming years (PIW Jan.29'21). How long-term oil demand ultimately unfolds remains to be seen. What's clear is that oil exports will remain an important source of government income for Abu Dhabi -- and the UAE -- for some time, even as the Opec member continues to diversify its economy away from hydrocarbons. “We believe there'll be a growing oil market for many more years and Adnoc will have a leading role to play in this market. But, this does not mean it's business as usual for us or for the industry. To stay competitive in the current and future oil markets, we have to be leading on cost efficiency and equally be leading on carbon efficiency,” Adnoc's Chief Technology Officer Alan Nelson told the recent Atlantic Council Energy Forum. Adnoc has moved to enhance efficiencies to reduce energy consumption at its facilities and continues to work toward its zero routine flaring commitment, having achieved a 90% flaring reduction so far. It is also expanding the capacity of its Al-Reyadah carbon capture, utilization and storage (CCUS) project to 5 million tons per year from 800,000 tons/yr now (PIW Jan.22'21). Like its Mideast Gulf neighbors, it is seeking to establish itself in clean energy and emerging technologies, including in "blue" hydrogen (from gas plus carbon capture) and "green" hydrogen (from renewable power). “There's no question that we're in the midst of an energy transition and all oil and gas companies, Adnoc as well as everyone else, really need to think strategically about how to manage their portfolios, how to manage their investments, and how to manage their overall strategies,” Nelson said. “No oil and gas company will be competitive in the future if they don't take sustainability seriously and put it at the center of their strategies and at the center of their business models. This trend and the push toward sustainability is well beyond social pressures today. It will be vital for our economic performance going forward.” Faced with the inevitable shift toward decarbonization and technological advancements that have made low-carbon technologies more cost-competitive, oil companies are recognizing they have little choice but to adapt to a changing global energy system. Mideast oil and gas producers have begun to diversify their domestic energy portfolios away from their high dependence on hydrocarbons to reduce their carbon footprints and energy intensity levels. The UAE is at the forefront of these efforts through its investments in solar and nuclear power, but its low-carbon agenda could still conflict with other strategic and commercial aims. Amid vastly improved cost competitiveness, the number and scale of solar photovoltaic projects in Abu Dhabi and Dubai has increased in recent years. Solar power -- including concentrated solar power (CSP) -- is expected to make further inroads, driven by increased efficiency and steady cost reductions. The start-up of Unit 1 of the 5,600 megawatt Barakah nuclear energy reactor last year has made the UAE the first Arab country to produce nuclear power. Once all four reactors are operational, the plant could meet about 25% of domestic power demand, which at present is mostly met from gas-fired power plants. Still, policy contradictions remain -- and not just in oil and gas. A 2,400 MW coal power plant due to be fully operational in 2023 in Dubai -- the first in Gulf Arab states -- will help the UAE diversify its energy mix and boost supply security, but works against climate concerns.