(Bloomberg) - The United Arab Emirates is accelerating a plan to raise its oil production capacity, according to people familiar with the matter, as it tries to cash in on its crude reserves before the world transitions to cleaner energy.
Abu Dhabi National Oil Co., which pumps almost all the UAE’s oil, wants to be able to produce 5 million barrels a day by 2025, according to the people. That’s sooner than a previously disclosed aim of 2030.
The new target will be difficult to achieve and may increase the expense of a project that was already set to cost billions of dollars, the people said. Adnoc and the UAE government initially planned to bring the objective forward to 2027, before deciding on 2025, they said.
The UAE is pushing to sell more oil and natural gas while fossil fuel prices stay high. Oil soared to $120 barrel following Russia’s invasion of Ukraine. While it’s slumped since June to around $90 amid concerns about a global economic slowdown, it’s still far above the UAE’s production costs.
“As we embrace the energy transition and future-proof our business, we will continue to explore potential opportunities that can further unlock value, free up capital and enhance returns,” Adnoc said in a statement to Bloomberg. It did not say whether the 2030 target had changed.
The UAE’s Energy Ministry didn’t immediately respond to a request for comment.
State-owned Adnoc has asked international companies that are partners in its oilfields to raise their long-term production levels by 10% or more, according to the people. If the UAE’s successful in reaching the 2025 goal, it may try to boost its capacity further to 6 million barrels daily by the end of the decade, they said.
The UAE is the biggest oil producer in OPEC after Saudi Arabia and Iraq. It says it has the ability to produce slightly over 4 million barrels a day. But it’s restricted from reaching that level because of caps imposed by the cartel, which is trying to balance supply and demand.
Last month, the UAE’s daily crude output was just under 3.4 million barrels, according to data compiled by Bloomberg.
The Organization of Petroleum Exporting Countries and its allies, a 23-nation group led by the Saudis and Russia, are set to to maintain production limits for the rest of the year. Saudi Arabia has said it wants to extend them with a new deal that goes into 2023.
The UAE is increasing oil output capacity while also trying to neutralize carbon emissions by 2050, partly by investing in solar power and cleaner fuels such as hydrogen. The country says the easy accessibility of its oil reserves and technologies like carbon capture will make its crude is among the least polluting to pump out of the ground.
Like Saudi Arabia, the UAE has said oil demand will remain high for decades and major producers need to invest in exploration to avoid future supply shortages.
“As long as the world requires oil and gas to maintain energy security, it is critical that the least carbon-intensive barrels are made available,” Adnoc said in the statement.
Saudi Arabia and the UAE are among the few producers investing in greater output. Saudi Arabia is trying to raise its crude capacity to 13 million barrels a day from 12 million by 2027.
Energy Intelligence earlier reported that the UAE wanted to increase its capacity to 5 million barrels a day by 2027.