United States
Energy Information
Administration
December 1999
United Arab Emirates
The United Arab
Emirates (UAE) is important to world energy markets because it contains 98
billion barrels, or nearly 10%, of the world's proven oil reserves. The UAE also
holds the world's fourth-largest natural gas reserves and produces significant
amounts of liquefied natural gas.
Note: Information contained in this report is the best available as of
December 1999 and can change.
GENERAL BACKGROUND
The
United Arab Emirates is enjoying an economic recovery as a result of the rise in
oil prices which resulted from OPEC production cuts in March 1999. While the UAE
has a relatively diversified economy for a Persian Gulf oil exporter, the period
of low oil prices in 1998 resulted in a decline in real gross domestic product
(GDP) of 5.0%. Real GDP growth for 1999 is projected at 4.5%.
Political System
The UAE is a
federation of seven emirates - Abu Dhabi, Dubai, Sharjah, Ajman, Fujairah, Ras
al-Khaimah, and Umm al-Qaiwain. Political power is concentrated in Abu Dhabi,
which controls the vast majority of the UAE's economic and resource wealth. The
two largest emirates -- Abu Dhabi and Dubai -- provide over 80% of the UAE's
income. In June 1996, the UAE’s Federal National Council approved a permanent
constitution for the country. This replaced a provisional document which had
been renewed every five years since the country’s creation in 1971. The
establishment of Abu Dhabi as the UAE’s permanent capital was one of the new
framework’s main provisions.
Other Industry
In recent years,
the UAE has undertaken several projects to diversify its economy and to reduce
its dependence on oil and gas revenues. The non-oil sectors of the UAE's economy
presently contrbute more than two-thirds of the UAE's total GDP. The federal
government has invested heavily in sectors such as aluminum production, tourism,
aviation, re-export commerce, and telecommunications. As part of its strategy to
further expand its tourism industry, the UAE is building new hotels, restaurants
and shopping centers, and expanding airports and duty-free zones. Agriculture
also makes up a significant portion of the UAE's economy. Dubai has become a
central Middle East hub for trade and finance, accounting for about 70% of the
Emirates’ non-oil trade.
Foreign Affairs
The UAE and
Iran continue to dispute the ownership of three islands, Abu Musa and the
Greater and Lesser Tunb Islands, which are strategically located in the Strait
of Hormuz. All three islands were effectively occupied by Iranian troops in
1992. The Mubarak field, which is located six miles off Abu Musa, has been
producing gas-rich oil since 1974. In 1995, the Iranian Foreign Ministry claimed
that the islands are "an inseparable part of Iran." Iran rejected a 1996
proposal by the Gulf Cooperation Council (GCC) for the dispute to be resolved by
the International Court of Justice, an option supported by the UAE. In early
1996, Iran took further moves to strengthen its hold on the disputed islands.
These actions included starting up a power plant on Greater Tunb, opening an
airport on Abu Musa, and announcing plans for construction of a new port on Abu
Musa. In the dispute, the UAE has received strong support from the GCC, the
United Nations, and the United States. Although Iran remains a continuing
concern for officials in Abu Dhabi, they have chosen not to escalate the
territorial dispute. Iran is one of Dubai’s major trading partners, accounting
for 20% to 30% of Dubai’s business.
Relations between Saudi Arabia and the UAE also have shown some
signs of strain in 1999, due to Saudi development of the Shaybah oilfield, with
estimated reserves of 14 billion barrels of crude oil. The UAE and Saudi Arabia
do not have a precisely defined border in the sparsely populated desert
separating them, and the Shaybah field straddles territory claimed by both
governments. Saudi Arabia began production from the Shaybah field in late 1998.
The UAE has demanded an agreement to share production from Shaybah. OIL The majority of the UAE’s crude oil is considered light, with
gravities in the 32o to 44o API range. Abu Dhabi's Murban
39o and Dubai's Fateh 32o blends are the UAE's primary
export crudes. Most of the UAE’s oil fields have been producing since the 1960s
or early 1970s. Proven oil reserves in Abu Dhabi have doubled in the last
decade, mainly due to significant increases in rates of recovery. Abu Dhabi has
continued to identify new finds, especially offshore, and to discover new
oil-rich structures in existing fields.
Under the UAE's constitution, each emirate controls its own oil
production and resource development. Although Abu Dhabi joined OPEC in 1967
(four years before the UAE was formed), Dubai does not consider itself part of
OPEC or bound by its quotas. Consequently, if Dubai were to produce at its full
capacity, Abu Dhabi would have to adjust its output in order to keep the UAE
within its OPEC production quota.
In response to the period of low oil prices in 1998 and early
1999, OPEC agreed in March 1999 to reduce output in an effort to shore up the
price of crude. The UAE’s production quota was lowered to 2.00 million bbl/d.
Actual production fell from a 1999 high of 2.25 million bbl/d in February 1999
to 2.05 million bbl/d in May 1999. In mid-1999, the UAE’s maximum crude oil
production capacity was estimated at 2.7-3.0 million bbl/d.
Restructuring Refining UAE has two smaller refineries. Umm al-Nar, in Abu Dhabi, is
now running at 80,750 bbl/d. Since its construction in 1976, the Umm al-Nar
plant has undergone debottlenecking as well as a recent expansion. The refinery
primarily supplies the domestic market. Metro Oil has a 75,000-bbl/d refinery in
Fujairah. Another private refinery is planned for Dubai, which is scheduled to
begin operating in mid-2000 and have a capacity of 40,000 bbl/d.
A new $300-million condensate refinery built by the Emirates
National Oil Company (ENOC) began operation in May 1999. The plant, located in
Dubai’s Jebel Ali Free Zone, produces 120,000 bbl/d of jet fuel, diesel,
naphtha, and gasoline.
Foreign Downstream Operations NATURAL GAS Reduced OPEC oil production quotas and increased domestic
consumption of electricity have provided incentives for the UAE to increase its
use of natural gas. Over the last decade, gas consumption in Abu Dhabi has
doubled, and is projected to reach 3 billion cubic feet per day (bcf/d) by 2000
and 4 bcf/d by 2005. The development of gas fields also increases exports of
condensates, which are not subject to OPEC quotas.
Projects The second phase of the UAE's $1 billion onshore gas
development program (OGD-2) at the Habshan natural gas complex located directly
over the huge Bab oil and gas field is currently underway. This second phase
includes the construction of three or four gas processing trains to process 1
bcf/d of gas, 300-500 tons per day (t/d) of natural gas liquids, 35,000-55,000
t/d of condensate and up to 2,100 t/d of sulphur. The construction contract was
awarded to Italy’s Snamprogetti in October 1998. Construction is scheduled to be
completed in early 2001.
Another project closely linked with OGD-2 is the Asab gas
development project, which was recently completed. The Asab development
processes around 830 million cubic feet per day (Mmcf/d) of associated wet gas
from the Thamama F and G reservoirs and produces up to 100,000 bbl/d of
condensate for processing at the Ruwais refinery. The gas will also support
other industries in Ruwais and be re-injected into Asab reservoirs to maintain
field pressure. The $700 million project was awarded to Snamprogetti in June
1997 by UAE’s Supreme Petroleum Council.
Supplying Dubai A project to pipe gas from the offshore Khuff field to Dubai
and the Taweelah industrial complex was abandoned in May 1999. Instead, Dubai
will be connected to the main Abu Dhabi gas receiving station by a
pipeline.
In February 1998, a landmark agreement was announced for the
supply of gas from Abu Dhabi to Dubai. The deal reportedly stipulates that Abu
Dhabi will sell gas to Dubai for less than $1 per million Btu. The pipeline’s
capacity is expected to be around 800 Mmcf/d; 400-600 Mmcf/d is to be supplied
to Dubai.
The Dolphin Project In October 1999, UOG and ADNOC issued a joint declaration
dividing up gas distribution between them. Gas from the Dolphin Project will be
the exclusive supply for gas-fired power plants, except in the Western Region of
Abu Dhabi, and will also supply gas for ADNOC contracts with Dubai. Gas from the
Dolphin Project will use the ADNOC distribution network until the project
develops its own network.
The planned extension from Oman to Pakistan would be built in
2005 or later, and would carry 1.5 Bcf/d onward to Pakistan. This phase of the
project is dependent on Pakistan's ability to pay for the gas, which is
questionable given the current weakness of its economy, but UAE officials
involved in the planning of the project have said Pakistan is being included
because they take a "long term view" of Pakistan's potential for economic
development, including possible UAE investments in enterprises such as
independent power plants (IPP's) in Pakistan which would consume the gas.
ELECTRICITY The privatization process for the Taweelah A-1 plant is
entering its final stages, and ADWEA expects to announce the choice of a foreign
partner which will have a 40% ownership stake by February 2000. Bids have been
received from CMS Energy, Total, Marubeni, and National Power (UK).
The most significant step in the reorganization is the
expansion of the Taweelah cogeneration facility. The expansion, known as
Taweelah A-2, is the UAE’s first independent water and power project (IWPP), and
reached financial close in April 1999. It is the second independent power
project in the Gulf after Oman’s al-Manah facility. With a price tag of some
$800 million, the expansion will add about 763 megawatts (MW) of power and 50
million gallons of desalinated water to the UAE’s supplies. The first gas
turbine is expected to operate by May 2000. Full-scale production is scheduled
for August 2001. The Taweelah A-2 project is to be run by Emirates CMS Power, a
joint venture between CMS Energy (40% ownership interest) and the newly-formed
Emirates Power Company (EPC) (60%). Several other projects also have been approved:
The Abu Dhabi Water and Electricity Authority (ADWEA) currently
is inspecting bids received in early December 1999 for a 1,500 MW plant at
Shuweihat, west of Abu Dhabi. Plans call for a plant to be operational there by
2003.
The other emirates are also expanding their electric power
generation infrastructures. Dubai plans to increase its electricity generation
to 2,572 MW by 2000. To this end, the Jabel Ali "D" station will be upgraded
with the installment of two new 400-MW gas turbines. In Sharjah, a new 100 MW
gas turbine generator will be added to the primary Liyyah power plant, raising
its production capacity to 1,065 MW.
The UAE also is taking part in a $1 billion plan to build a
regional power grid throughout the countries of the Gulf Cooperation Council
(GCC). The first phase of the plan would link Saudi Arabia, Kuwait, Bahrain and
Qatar; the UAE and Oman would join the grid in the second phase of the plan. GCC
electricity ministers signed a final agreement on the project in June 1999. The
plan is based on the assumption that each country will have its own unified
power grid, and the UAE is doing its part by connecting all the power stations
along its western coast with the central region.
Sources for this report include: CIA World Factbook 1999;
Dow Jones News Wire service; Economist Intelligence Unit ViewsWire; Oil and Gas
Journal; Petroleum Economist; Petroleum Intelligence Weekly; International
Market Insight Reports; U.S. Energy Information Administration; WEFA Middle East
Economic Outlook. COUNTRY OVERVIEW ECONOMIC OVERVIEW ENERGY OVERVIEW ENVIRONMENTAL OVERVIEW * The total energy consumption statistic includes petroleum,
dry natural gas, coal, net hydro, nuclear, geothermal, solar and wind electric
power. The renewable energy consumption statistic is based on International
Energy Agency (IEA) data and includes hydropower, solar, wind, tide, geothermal,
solid biomass and animal products, biomass gas and liquids, industrial and
municipal wastes. Sectoral shares of energy consumption and carbon emissions are
also based on IEA data. OIL AND GAS INDUSTRIES Major Refineries: Ruwais (132,050 bbl/d), Umm al-Nar II
(80,750 bbl/d), Metro Oil (Fujairah)(75,000 bbl/d) For more information from EIA on United Arab Emirates, please
see: Links to other U.S. government sites: The following links are provided solely as a service to our
customers, and therefore should not be construed as advocating or reflecting any
position of the Energy Information Administration (EIA) or the United States
Government. In addition, EIA does not guarantee the content or accuracy of any
information presented in linked sites.
Abu Dhabi National Oil Company
(ADNOC)
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The
UAE contains proven crude oil reserves of 97.8 billion barrels, or slightly less
than 10% of the world total. Abu Dhabi holds 94% of this amount, or about 92.2
billion barrels. Dubai contains an estimated 4.0 billion barrels, followed by
Sharjah and Ras al-Khaimah, with 1.5 billion and 100 million barrels of oil,
respectively.
On October 12,
1998, the Abu Dhabi National Oil Company (ADNOC) announced a major plan to
restructure its management. The plan consolidates ADNOC’s operations under five
new directorates: Exploration and Production, Gas Processing, Chemicals,
Marketing and Refining and Shared Services (Administration).
The UAE has two
refineries operated by ADNOC. The Ruwais refinery underwent a $100-million
upgrade in 1995 and is now operating at 132,000 bbl/d, producing light products
mainly for export to Japan and India. Fuel oil from Ruwais is sold as bunkers by
ADNOC and used for domestic power generation. A $1.2-billion second-phase Ruwais
expansion will include a new 135,000-bbl/d crude distillation unit, a
130,000-bbl/d fractionation plant, and expansion of residual oil conversion
facilities with a 40,000-bbl/d hydrocracker and a 36,000-bbl/d visbreaker.
[Fractionation is a process of separating various hydrocarbons from natural gas
or oil as produced from the ground. Visbreaking is a thermal cracking process in
which heavy atmospheric or vacuum distillation bottoms are cracked at moderate
temperatures to increase production of distillate products and reduce viscosity
of the distillation residues]. ADNOC plans to use the fractionation unit to
process increased future condensate flows from the Bab and Asab fields. When
completed in 2000, Ruwais’ total capacity will be around 475,000 bbl/d.
In October 1998, the International Petroleum Investment Company (IPIC),
the UAE’s downstream investment outfit, agreed to purchase 50% of the Hyundai
Oil Refinery Company of South Korea for $500 million. The UAE is the
second-largest crude oil supplier to South Korea after Saudi Arabia, exporting
83 million barrels (15% of South Korea’s total imports) in the first eight
months of 1998. IPIC’s overseas holdings also include a 10% stake in Spain’s
CEPSA and a 19.6% share of Austria’s OMV. CEPSA’s profits rose by 40% in 1997;
OMV’s profits increased by 18%.
The UAE’s natural gas reserves of roughly 212.0 trillion cubic feet
(Tcf) are the world's fourth largest after Russia, Iran, and Qatar. The largest
reserves of 196.1 Tcf are located in Abu Dhabi. Sharjah, Dubai, and Ras
al-Khaimah contain smaller reserves of 10.7 Tcf, 4.1 Tcf, and 1.1 Tcf,
respectively. In Abu Dhabi, the non-associated Khuff gas reservoirs beneath the
Umm Shaif and Abu al-Bukhush oil fields rank among the world's largest. Current
gas reserves are projected to last for about 150-170 years.
The past few years
have seen the UAE embark on a massive multi-billion dollar program of investment
in its gas sector including a shift toward gas-fired power plants and the
transformation of the Taweelah commercial district into a gas-based industrial
zone. An ambitious plan to interconnect the gas grids Qatar, the UAE, and Oman,
the Dolphin Project, also is planned.
Dubai’s gas
consumption is expected to grow by nearly 7% each year through 2005, due to
expansion of its industrial sector, a switch to gas by its power stations, and
the need for an enhanced oil recovery (EOR) system based on gas injections for
its dwindling oil formations. Dubai projects future demand will average 655
Mmcf/d in 2000 and 810 Mmcf/d in 2005, with major swings between summer and
winter consumption patterns. Currently, Dubai’s entire gas supply comes from
fellow UAE member Sharjah, which transports about 430 Mmcf/d at approximately
$1.25/million Btu. Amoco operates three fields and the 800-Mmcf/d Sajaa
processing facility in conjunction with the Sharjah government.
The Dolphin
Project aims to develop links between the gas infrastructures of Qatar, the UAE,
and Oman, with a possible future link to Pakistan. It will allow the export of
non-associated gas from Qatar's massive offshore North Dome field. A Statement
of Principles for the project was signed in March 1999 between the UAE Offsets
Group (UOG) and the Qatar General Petroleum Corporation (QGPC). Mobil Oil Qatar
signed a memorandum of understanding covering its participation in the project's
upstream component in July 1999. Estimated to cost $8 to $10 billion over the
next six to seven years, the project will begin as a subsea pipeline from Ras
Laffan in Qatar to a landfall in Abu Dhabi, which will then be extended to Dubai
and northern Oman. The start at 48 inches in diameter, stepping down to 30
inches by the time it reaches Oman. In its initial phase, the pipeline is to
carry 3 Bcf/d of Qatari gas to the UAE and Oman, accounting for nearly 10% of
total world gas supplies shipped by pipeline.
The UAE’s soaring demand for electric power, coupled with volatile
swings in peak loads, led the Emirates in 1997 to form a Privatization Committee
for the Water and Electricity Sector. In early 1998, the committee called for a
comprehensive restructuring, including the elimination of the state-owned Abu
Dhabi Water and Electricity Department (ADWED) in favor of sweeping
privatization. ADWED will be tranformed into a regulatory body, the Abu Dhabi
Water and Electricity Authority (ADWEA). The government plans to take a majority
holding in the new ventures with minority interests held by foreign firms.
Gradually, the government will privatize its shares through initial public
offerings (IPOs), allowing UAE nationals to become shareholders.
In April 1998, ABB was awarded the contract
to build a $600-million cogeneration plant for ADNOC. The 500-MW, gas-fired
plant will increase the available power to the Ruwais refining facility (see
Refining section above) to 700 MW. The new plant will also supply up to 8
million g/d of water. Full operation of the plant is expected to begin in
2000.
President: Sheikh Zayed bin Sultan Al Nahayan
Prime Minister: Sheikh Maktoum bin Rashid al-Maktoum
Independence: December 2, 1971 (from United
Kingdom)
Population (1999E): 2.3 million
Location/Size: Persian Gulf between Oman and Saudi
Arabia/30,000 square miles
Major Cities: Abu
Dhabi (capital), Dubai, Sharjah, al-Ain
Languages:
Arabic (official), Persian, English, Hindi, Urdu
Ethnic Groups: Arab (42%), South Asian (50%), other expatriate
(Western and East Asian) 8%. Less than 20% of the population are UAE
citizens.
Religion: Muslim 96% (Shi’a 16%),
Christian, Hindu, Other 4%
Defense (1997): Total
manpower 64,500 (Army 59,000; Air Force 4,000; Navy 1,500)
Currency: Dirham (AED)
Market
Exchange Rate (12/12/99): US$1 = 3.67 Dirhams
Gross Domestic Product (1999E): $51.3 billion
Real GDP Growth Rate (1999E): 4.5%
Inflation Rate (consumer prices)(1999E): 3.5%
Current Account Balance (1999E): $3.7 billion
Major Trading Partners: Japan, United Kingdom, United States,
Singapore, Germany, South Korea, Iran, India
Merchandise Exports (1999E): $34.2 billion
Merchandise Imports (1999E): $29.4 billion
Merchandise Trade Balance (1999E): $4.8 billion
Major Export Products: Crude oil, natural gas, re-exports,
aluminum, dried fish, dates
Major Import
Products: Manufactured goods, machinery, and transportation equipment,
food
Oil Export Revenues (1999E): $11.0
billion
International Reserves (1999E): $9.3
billion
Minister of Petroleum and Mineral Resources: Obeid bin Saif
al-Nasiri
Proven Oil Reserves (1/1/99E): 97.8
billion barrels
Oil Production (average, 1st 9
months 1999E): 2.34 million bbl/d, of which 2.18 million bbl/d was crude
oil
OPEC Crude Oil Production Quota (1999): 2.00
million bbl/d (for whole UAE)
Oil Consumption
(1998E): 318,000 bbl/d
Net Oil Exports (1998E):
2.2 million bbl/d
Major Crude Oil Customers
(1997E): Japan (60%), other Far East (20%)
Crude
Oil Refining Capacity (1/1/99E): 287,800 bbl/d
Natural Gas Reserves (1/1/99E): 212 trillion cubic feet
(Tcf)
Natural Gas Production (1998E): 1.31
Tcf
Natural Gas Consumption (1998E): 1.07
Tcf
Natural Gas Exports (1998E): 0.25 Tcf
Natural Gas Imports (1998E): 0.02 Tcf
Electric Generation Capacity (1/1/98E): 5.5 gigawatts
Electricity Production (1998E): 20.1 billion
kilowatthours
Minister of Electricity & Water: Humayd bin Nasir
al-Uways
Total Energy Consumption (1998E): 1.8
quadrillion Btu* (0.5% of world total energy consumption)
Energy-Related Carbon Emissions (1998E): 31.3 million metric tons
of carbon (0.5% of world carbon emissions)
Per
Capita Energy Consumption (1998E): 670.3 million Btu (vs. U.S. value of
350.7 million Btu)
Per Capita Carbon Emissions
(1998E): 11.5 metric tons of carbon (vs. U.S. value of 5.5 metric tons of
carbon)
Energy Intensity (1998E): 46,300 Btu/
$1990 (vs U.S. value of 13,400 Btu/ $1990)**
Carbon
Intensity (1998E): 0.8 metric tons of carbon/thousand $1990 (vs U.S. value
of 0.21 metric tons/thousand $1990)**
Sectoral Share
of Energy Consumption (1997E): Transportation (50.4%), Industrial (48.5%),
Residential (1.1%)
Sectoral Share of Carbon
Emissions (1997E): Industrial (63.6%), Transportation
(34.5%), Residential (1.9%)
Fuel Share of Energy
Consumption (1998E): Oil (38.4%), Natural Gas (61.6%)
Fuel Share of Carbon Emissions (1998E): Natural Gas (54.0%), Oil
(46.0%)
Renewable Energy Consumption (1997E):
0.71 trillion Btu* (3% decrease from 1996)
Number of People per Motor Vehicle (1997): 9.7 (vs. U.S. value of
1.3)
Status in Climate Change Negotiations:
Non-Annex I country under the United Nations Framework Convention on Climate
Change (ratified December 29th, 1995). Not a signatory to the Kyoto
Protocol
Major Environmental Issues: Lack of
natural freshwater resources being overcome by desalination plants;
desertification; beach pollution from oil spills
Major International Environmental Agreements: A party to
Conventions on Climate Change, Desertification, Endangered Species, Hazardous
Wastes, Marine Dumping and Ozone Layer Protection . Has signed, but
not ratified, Biodiversity and Law of the Sea
**GDP based on EIA
International Energy Annual 1998
Organizations: Abu Dhabi National Oil Company (ADNOC); Operates
three main oil and gas operating companies, five Service companies, three joint
ventures to fully utilize the produced gas, two maritime transport companies for
crude oil, refined product and LNG and one refined product distribution
company.
Major Gas Processing Plants: Bab, Bu Hasa, Das Island, Habshan
(2), Jebel Ali, Ruwais
Major Oil Fields: Abu
Dhabi: ‘Asab, Bab, Bu Hasa, Al-Zakum Dubai: Fallah, Fateh, Southwest
Fateh, Margham, Rashid Sharjah: Mubarak (near Abu Musa Island)
Major Associated Gas Fields: Abu Dhabi: Abu
al-Bukhush, Bab, Bu Hasa, Umm Shaif, Zakum
Ports: Abu Dhabi: Das Island, Delma Island, Jebel as
Dhanna, Ruwais, Abu al Bukhush, Al Mubarraz, Zirku Island, Port Zayed, Umm al
Nar Dubai: Jebel Ali, Fateh, Port Rashid Sharjah: Mubarak
EIA - Country
Information on the United Arab Emirates
1999 CIA World
Factbook - United Arab Emirates
U.S.
State Department Country Commercial Guide - United Arab Emirates (requires Adobe
Acrobat Reader)
U.S.
State Department Report on Economic Policy and Trade Practices - United Arab
Emirates
U.S. State Department
Consular Information Sheet - United Arab Emirates
U.S. Department
of Energy's Office of Fossil Energy's International section - United Arab
Emirates
ArabNet: United Arab
Emirates
University of Texas
Center for Middle Eastern Studies - United Arab Emirates
Maps
of the Middle East
MENA
Petroleum Bulletin
AME Info Middle East Business
Information
Planet Arabia.com
Lonely Planet
Guide: United Arab Emirates
File last
modified: December 28, 1999
Lowell Feld
lfeld@eia.doe.gov
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