You will find Dubai located in the United Arab Emirates, a nation which holds considerable energy reserves for its overall size. In 2018, the country was the seventh-largest producer of crude oil in the world. It was also ranked fourth as a producer of petroleum liquids by OPEC.
The Dubai oil industry is even ranked seventh in total natural gas reserves in the world today. Producing hydrocarbons is critical to the overall economy of the United Arab Emirates. Roughly $65 billion, which is 20% of the nation’s export revenues, is available because of the presence of crude oil.
When oil prices were at their peak in 2013, the industry in the UAE generated $123 billion in revenues. Although Dubai is the largest city in the country, it does not control the majority of production that occurs. That distinction belongs to Abu Dhabi, which holds 94% of the overall reserves that are provable.
Dubai holds an estimated 4 billion barrels of crude oil that could be extracted at some point. Each emirate is responsible for managing this resource within its borders to support the overall nation. This structure creates a mix of production-sharing arrangements and service contracts.
The Dubai Supreme Council of Energy oversees the energy policy coordination and development in the emirate.
Important Dubai Oil Industry Statistics
#1. The United Arab Emirates produces an average of 3.7 million barrels of oil and other petroleum liquids per day. Roughly 2.9 million barrels were of crude oil in 2016. (U.S. Department of Commerce)
#2. Dubai is the third-largest producer of oil for the United Arab Emirates. The city currently holds 1.5% of the known reserves available to the industry today. (U.S. Department of Commerce)
#3. Roughly 30% of the country’s gross production of natural gas has been re-injected into its oil fields using the EOR techniques to improve production. The reserves of natural gas in the United Arab Emirates has a relatively high sulfur content, which makes processing this resource economically challenging. (U.S. Department of Commerce)
#4. The oil refining capacity in the United Arab Emirates measures 1.12 million barrels per day. The United Arab Emirates recently expanded this ability in 2015 by bringing the Ruwais facility online, which has a 417,000 barrel-per-day capacity. (U.S. Department of Commerce)
#5. Oil demand in Dubai and the rest of the country reaches 789,000 barrels per day. In 2017, the United Arab Emirates exported over 2.3 million barrels of crude oil per day. (OPEC)
#6. The United Arab Emirates also exports over 653,000 barrels per day of petroleum products that are useful in the creation of multiple products. (OPEC)
#7. The United Arab Emirates had to cut spending by 20% in 2015, and then another 17% in 2016 because of falling crude oil prices. At its peak, oil was at $110 per barrel. By the time the crash was over, it was approximately $30 per barrel. That is why a 5% VAT was implemented in 2018 to help support the overall economy. (Mubasher)
#8. Although the global average for oil recovery is approximately 35%, the Dubai oil industry wants to increase its recovery rates up to 70% at its fields. New EOR technologies are expected to begin lowering operational expenditures for the industry while extending the lifespan of the fields currently producing. (U.S. Department of Commerce)
#9. The economy of Dubai was initially built from revenues provided by the oil industry, but with the shift toward Abu Dhabi for production, revenues from natural gas and petroleum now account for less than 5% of the GDP for the emirate. (Bloomberg)
#10. Oil production once accounted for 50% of the GDP in Dubai, but now it contributes less than 1% of the gross domestic product today. (Bloomberg)
#11. When the economy crashed in 2009, Dubai World sought to have a standstill initiated on its debt repayments. The government-owned holding company had to restructure $25 billion in debt as borrowers left the emirate due to the shift in oil revenues. (Bloomberg)
#12. Dubai expects to have at least 25% of its energy needs met through renewable resources by 2028. (Bloomberg)
#13. Since 2003, when oil prices began to move toward their all-time highs, the correlation between share prices for the real estate companies in Dubai and the oil prices decreased from 0.7 to 0.3, making it have virtually no correlation to what occurs in the industry today. (Bloomberg)
#14. To help shore up revenues within the country to account for sagging oil revenues, the government of the United Arab Emirates implemented a 50% tax on carbonated drinks and a 100% tax on energy drinks and tobacco products. A 200% tariff on pork products and live animals requiring import licenses was implemented as well. (HKDTC)
#15. It is challenging for Dubai to compete with Abu Dhabi because of the way that oil reserves are structured in the United Arab Emirates. The competing emirate occupies more than 80% of the land area and 90% of the oil wealth that comes from the region. (Council for Australian-Arab Relations)
#16. About 10% of the provable global supply of crude oil reserves exists in the United Arab Emirates today. When Dubai’s oil industry combines with Abu Dhabi’s, there are enough energy resources to meet domestic demands in the UAE for the next 100 years. (Council for Australian-Arab Relations)
#17. About 40% of the crude oil that is traded globally ships through the 55-kilometer Strait of Hormuz. Pipelines in this region could transport as much as 6.5 million barrels of oil per day if the capacity reached peak performance. (Council for Australian-Arab Relations)
#18. Roughly 61,000 jobs were added to the economy of the United Arab Emirates from 2017-2018 because of a surge in real estate and construction activities. Employment in the services and manufacturing sectors dropped by 0.8% during that period, offering jobs to 1.11 million and 469,000 people respectively. (Khaleej Times)
#19. 90% of the companies involved in non-oil activities expect to hire new workers for the FY19 year that ends in June 2019. 64% of marketing, PR, and advertising firms say that they are hiring as well. Instead of oil and gas jobs in Dubai, the most popular sectors for employment are in artificial intelligence, robotics, and IT sector employment. (Khaleej Times)
#20. The MENA region has the highest unemployment rate in the world today at 19%. 60% of the population in the GCC countries say that they believe their government is a favorable employer compared to jobs in the private sector. (Go-Gulf)
#21. 50% of the employees in the MENA region are under 29 years old. 2/3 of employed workers say that their salaries are lower than those paid by other firms in the same industry worldwide. (Go-Gulf)
#22. 73% of the employees working in the Dubai oil industry are in full-time positions during the average year. Only 6% of them are classified as part-time workers, which means they are employed between 8-29 hours during the week. (Go-Gulf)
#23. 1 in 4 employees say that they have been working for 2 years or less with their current employer. Only 15% of the industry workers have been employed in the same job for eight years or more. (Go-Gulf)
#24. 36% of workers in Dubai say that they have held two jobs over the last 5 years. Another 22% say that they have held three jobs during that time. (Go-Gulf)
#25. The Dubai oil industry ranks fourth as a preferred industry for employment in Dubai, with 28% of people saying that they would prefer a position there. 35% thought the banking sector was the best industry for employment, followed by construction (32%) and telecommunication (31%). (Go-Gulf)
Dubai Oil Industry Trends and Analysis
Oil production in Dubai and the United Arab Emirates includes oil sands, shale oil, crude oil, and natural gas liquids (NGLs). The industry was able to produce up to 3.94 million barrels of all fuel products related to petroleum in 2017. There were additional resources in coal derivatives and biomass harvested by firms as well.
As with the other OPEC nations, the United Arab Emirates is overly reliant on revenues from the oil and gas industry to support its economy. Although the reserves available in Dubai and the rest of the country will continue to support this population for some time, the clock is slowly taking toward a deadline for producers. Unless other sources of revenue can become a significant factor, a crashing crude oil price or over-use of industry resources could dump the nation into a severe recession.
We have already seen the impact of how oil prices can affect revenues for a country like the United Arab Emirates. With less than 50% of the funds available today compared to 2013 revenues, the rise and fall of commodity pricing drive the decision-making process in Dubai today. Until another economic resource becomes available, this will be the trend that investors, producers, and the country as a whole will experience through the activities of the Dubai oil industry.
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