WATCH: Seismic surveys take oil exploration to next level in Abu Dhabi



Earlier this year, when Chinese President Xi Jinping visited the UAE, the Abu Dhabi National Oil Company awarded the world’s largest seismic survey to a unit of the Chinese National Petroleum Corporation.

The deal was estimated to be worth Dh5.88 billion and the project itself is expected to be completed in 2024. But many outside the oil-and-gas industry were asking what exactly seismic surveys were.

Essentially, they help geologists map out the earth's subsurface up to 7,600 metres. They provide real-time data that helps engineers identify trapped oil structures.

The surveys are carried out both onshore and offshore.

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The National visited a site in the Al Dhafra Region of Abu Dhabi, where Adnoc is carrying out work onshore.

This involves a three-step process.

First, crew members lay out special sensors called geophone cables across the desert, then a vibrator truck surveys the area, sending energy waves into the subsurface along the way.

These energy waves are reflected back by the different layers in the subsurface, and captured by the geophones that are on the surface.

All of this raw data is then sent over to Adnoc’s headquarters where geologists create 3D models of the subsurface.

Operations such as seismic surveys are part of Adnoc's 2030 growth strategy to increase oil production efficiently and reach their targets.

Abdulla Shatteri, an exploration manager for geophysics and geology at Adnoc, summed up the long-term prospects of these surveys.

“The main objective of this is to accelerate the exploration and production in these blocks, and that will contribute to the overall economy of our country,” he said.

This week, Adnoc said it has discovered large hydrocarbon deposits equivalent to a 1 per cent increase to existing oil reserves and a 7.1 per cent addition to proven gas reserves as it raises investment spend to boost crude output capacity to 5 million barrels per day by 2030.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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