Abu Dhabi is a cornerstone of the UAE's economy, contributing 90 per cent of the nation's total oil income.

Despite weak global demand and an Opec quota that was slashed from 2.03 million barrels per day (bpd) last year to 1.9 million bpd this year, the UAE is expected to earn nearly $15.8 billion from oil exports this year and is looking to tender an estimated $5,000 million worth of new engineering, procurement and construction (EPC) work in the course of the next year.

The earnings are nearly five per cent higher than the $15.1 billion netted in 2001.

The country, whose GDP rose by 1.3 per cent this year to 217,000 million dirhams ($59,130 million) according to its central bank despite the quota slash, is aiming to raise its sustainable oil capacity and upgrade its hydrocarbon infrastructure.

For Abu Dhabi, this translates to 300,000 bpd of greater production capacity, in line with Abu Dhabi National Oil Company's (Adnoc) medium term target of three million bpd. Production capacity at present, stands at 2.2 million bpd.

The oil and gas sector provides around a third of the UAE's GNP; the result of an ongoing effort to lessen the country's dependency on the sector and diversify. It is still, however, a cornerstone of the UAE's economy.

An Oil and Industry News study showed that Abu Dhabi supplied approximately 748 million barrels of the 837 million barrels produced in the UAE in 2000.

Its revenues of 21 billion dollars also accounted for 90 per cent of the UAE's total oil income. Abu Dhabi also controls much of the oil and gas reserves, with around 92.2 billion barrels of oil and 196.1 trillion cu ft of gas.

The projected earnings represents a five per cent increase over the $15.1 billion netted in 2001, when crude prices averaged around $23 per barrel, according to the National Bank of Abu Dhabi (NBAD).

In its monthly bulletin, NBAD projected the oil sector's contribution to GDP at around 27.3 per cent this year, equivalent to last year's share.

Interestingly, this is despite the fact that average oil prices were about 13 per cent below 2000 prices, (when oil income stood at its highest level of more than $20 billion with crude oil prices over $27).

The discrepancy might be attributed to a boom in construction projects.

While the country tries to work out if its economy contracted or grew in reality, (in February, Planning Minister Shaikh Humaid bin Ahmed Al Mualla announced that nominal gross domestic product (GDP) had contracted by 4.2 per cent and five months later, the central bank announced a GDP rise of 1.3 per cent) the upstream sector is set to be the recipient of 40 per cent of total investment as the UAE looks to its oil sector to lead the way.

Abu Dhabi Company for Onshore Oil Operations (Adco) is expected to invest about $800 million in major project work. Offshore, $1,200 million is planned at the Umm Shaif field by Abu Dhabi Marine Operating Company (Adma-Opco).

Meanwhile, Adco is expected to gain more than 200,000 bpd of new production capacity from two field expansion projects, Bab and Northeast Abu Dhabi. The commencement of work is also imminent on the $1,200 million Umm Shaif scheme, which calls for the injection of 600 million cu ft per day of gas into the oil-producing reservoirs. The field has a production capacity of 250,000 bpd.

More work is planned. An EPC tender is due to be issued in early 2003 for the Das island debottlenecking project, aimed at increasing production capacity of the Zakum and Umm Shaif processing trains by 100,000 bpd.

Along with raising capacity, the maintenance and upgrade of older facilities is high on the agenda of Adnoc's subsidiaries.

The parent company supervises policy in Abu Dhabi, under the guidance of the Supreme Petroleum Council (SPC) while production is managed through joint ventures through partnerships with international companies. The ongoing programme to upgrade pneumatic control systems to digital continues to provide a steady stream of work for contractors.

International oil company (IOC) involvement is set to increase over the coming six months.

By the end of the year, the SPC should have selected an IOC for a 28 per cent stake on offer in offshore operator Zakum Development Company (Zadco), currently owned by Adnoc (88 per cent) and Japan Oil Development Company (Jodco - 12 per cent).

Adnoc will reduce to 60 per cent its interest in the field, which currently produces about 500,000 bpd at Upper Zakum.