Region seeks to raise energy output
Costs higher than conventional means
The UAE and Bahrain are set to become the next Gulf countries to use fracking to boost oil and gas supplies as the region scrambles to increase production, industry experts say.
Much of the envisaged new gas supply would help meet domestic energy needs, while additional production could also allow Gulf states to boost exports or free up conventional hydrocarbons for sale overseas.
Saudi Arabia and Oman are the only countries in the region with commercial production from fracking, using techniques including horizontal drilling and hydraulic fracturing to draw oil and gas from tight rock formations.
Fracking – or hydraulic fracturing – is a technique for extracting oil, natural gas or geothermal energy from rocks with low permeability. It involves drilling into the earth and then directing a high-pressure mixture of water, sand and chemicals into a rock layer to create cracks through which the oil or gas can move more freely.
Bahrain and the UAE could follow Saudi Arabia and Oman in making use of the technology within the next decade, energy consultancy Wood Mackenzie told AGBI.
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There are two promising projects in the UAE – the Ruwais Diyab unconventional gas development and Unconventional Onshore Block 3, where US shale specialist EOG Resources is exploring for oil.
Abu Dhabi state oil company Adnoc and France’s TotalEnergies are at an advanced stage at Ruwais Diyab, where early gas production began in 2020.
The project is targeting output of up to 1 billion cubic feet per day and forms part of a UAE strategy to achieve gas self-sufficiency.
Adnoc estimates that 2.1 billion cubic feet of gas per day from Ruwais Diyab and another conventional project could generate 13 gigawatts of continuous electricity – equivalent to the power requirements of another Abu Dhabi.
The UAE has estimated resources of 160 trillion standard cubic feet of recoverable unconventional gas and 22 billion barrels of recoverable unconventional oil.
Sharif Hamed Al Dhaheri, senior vice president for unconventional at Adnoc Onshore, said: “These resources represent a significant opportunity to drive sustainable economic growth for the UAE and ensure reliable flows of energy to meet rising global energy demand.”
The oil could also serve a different purpose, as Adnoc is targeting crude production capacity of 5 million barrels per day by 2027, up from the current maximum of 4.85 million bpd, after the UAE’s departure from Opec in May. The country’s exit removed production quotas that had put a ceiling on some members’ output since 2023.
In Bahrain, EOG Resources is working with Bapco Upstream to explore deep, tight gas resources beneath the onshore Bahrain Field.
Bahrain began importing liquefied natural gas in 2025 as its own gas production declined.
Kuwait, which is chronically short of gas, could follow suit. Kuwait Oil Company has held talks with EOG about exploring some of its own unconventional reserves, according to Wood Mackenzie.
Saudi Arabia is already using unconventional gas to reduce the amount of oil it burns at home.
Its sprawling $100 billion Jafurah field began production last year and is targeting 2 billion cubic feet per day by 2030.
State-run producer Saudi Aramco has estimated its unconventional gas programme could eventually displace the equivalent of around 500,000 barrels of oil per day from domestic energy generation.
Josh Dixon, senior upstream research analyst at Wood Mackenzie, said such moves will enable Saudi Arabia to hike crude exports: “In countries like Saudi Arabia, increased natural gas production from unconventional resources enables the country to reduce use of oil in seasonal power generation, enabling greater export volumes.”
US shale expertise moves east
The cost of fracking and tapping into unconventional reservoirs is much higher than that of traditional drilling. Aramco chief executive Amin Nasser said last year, as reported by Reuters, that the company’s extraction costs were as low as $2 per barrel of oil equivalent and $1 for gas.
By comparison, US oil producers need minimum crude prices of about $60 to $70 a barrel on average to drill new wells profitably, according to Dallas Federal Reserve surveys, although the likely costs of the Gulf projects remain unclear.
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Breakeven rates – the price of hydrocarbons needed to cover drilling and other set-up expenses – are more challenging, and it may not be appropriate to compare America’s vast shale reserves with the economic rationale of Middle Eastern projects.
“For example, Jafurah’s value is partly driven by its role in supplying domestic gas-fired power generation, which can in turn free up oil for export,” Wood Mackenzie’s Dixon said.
Jafurah and Khazzan are competitive compared with US shale, he said, and an unconventional oil reservoir in the UAE known as the Shilaif Formation has the “potential to be cost-competitive”.
But Gulf producers also have the advantage of entering the industry after two decades of US experimentation with horizontal drilling and fracking.
“The last 20 years have yielded many lessons that enable greater efficiency, lower cost and greater productivity from shale and tight oil and gas wells,” Dixon said.
“In the right geology, these lessons can be applied to high-performing projects.”