On Sunday, Abu Dhabi declared a massive oil discovery, which raised the UAE’s reserves by around 25 percent. Besides, the UAE’s capital also promised an enormous investment into its state-owned Abu Dhabi National Oil Company (ADNOC). But what does this discovery mean for the country and its place in the whole world?
How will the new discovery impact the local economy?
Richard Upshall, who has worked in the UAE’s oil and gas industry for more than 20 years and has established several companies, including Dubai-headquartered OES Asset Integrity Management, says: the $122 billion boosts into ADNOC is great news for the local economy. He also related that it’s equivalent to a quantitative easing move in the UK, so it’s a huge boost to the economy.
Richard Upshall also stated that the failure of world oil prices earlier this year because of the coronavirus had an effect on the country’s whole oil and gas industry, including service companies and supply chains.
He evoked that ADNOC’s $122 billion investment will enhance the local jobs, national jobs, expats, and foreign companies, adding: Malls will be busier, shops will be busier. It will have further-reaching effects into the economy, especially after COVID.
How significant is the new discovery?
According to OPEC’s 2019 Annual Statistical Bulletin, Abu Dhabi’s newly-discovered 24 billion barrels worth of oil reach the UAE’s total predicted reserves to almost 121.8 billion. Thus the latest discovery reveals that the UAE passing Kuwait as having the world’s 5th largest oil reserves, according to the 2019 bulletin.
Otherwise, ADNOC, and for the last three years, has been collecting around three million barrels of oil per day. Therefore, the latest discovery accelerates its plan to raise production to a record five million barrels per day. However, the entire 13-member Organization of the Petroleum Exporting Countries (OPEC), of which the UAE is a member, collected in October a total on 24.59 million barrels per day on average.
How essential is oil to the UAE economy?
In fact, according to OPEC, oil and gas directly contributes to around 30 percent of the UAE’s gross domestic product (GDP). According to the UAE Embassy in Washington DC, Abu Dhabi contains the vast majority of the country’s oil reserves, with 116.2 billion barrels.
Moreover, Dubai, Sharjah, and Ras Al Khaimah have all smaller reserves, valued at 4 billion, 1.5 billion, and 500 million, respectively. According to Bloomberg, Dubai’s economy is more diverse, with just one percent of GDP coming from oil production.