The UAE is recognized as major participant in the land of natural resources and it has well stabled itself in the oil and energy industry. UAE is one of the member states of OPEC ( Organization of the Petroleum Exporting Countries ) and has been a important place in oil and gas energy industry in all around the universe by holding maximal retention of oil militias in the federation. The cardinal subject of the survey is to analyse the oil and energy industry of UAE so as to analyse the part and impact of oil and gas industry to the economic development ( About OPEC ) .
Fundamentalss of oil and energy industry:
Historical Development of the Oil Sector around the World:
Before five thousand old ages, when Herodotus found oil cavities in Babylon, at that clip planetary oil industry was started. Other of import facts are described below-
In 1951, Persian oil industry had been nationalised.
Organization of the Petroleum Exporting Countries ( OPEC ) has been formed in 1959.
In 1999, Saudi Arabia, Mexico and Venezuela fallen in understanding of oil and energy industry.
Oil obtained from giant was used as the beginning of fuel.
On 14 September 1960 in Baghdad, OPEC was structured in a meeting by five members and was registered on 6 November 1962 with United Nations Secretariat.
Addition in demand by persons every bit good as organisations have given rise to the coal oil.
Subsequently in few decennaries, the industry started the boring of rough oil from oil Wellss.
In the Gulf of Mexico, the first oil well was constructed with a deepness of 100m ( History of the Oil Industry ) .
The UAE has been a member of the OPEC since 1967 and recognized as superior in footings of the oil and gas energy industry with the federation that holds 10 % of the entire oil militias of the universe. For the future chances in the natural gas sector, it would function to the other industries as a manufacturer of oil and gas. Abu Dhabi and Dubai are the two emirates that are contributed in the growing and success of oil and energy sector in the U.A.E. The grosss earned after bring forthing and exporting oil in the worldwide are used in farther enlargements of industries that provide employment to their people in order to increase populating standard and besides heighten economic system ( Energy and UAE ) .
Importance of Oil in the UAE:
The UAE is fundamentally an indispensable supplier of oil in the worldwide by keeping 10 per centum of planetary supply of petroleum oil militias. UAE histories for 30 % of its oil that chiefly influenced the domestic economic system. UAE is emerging as an of import provider of energy in the worldwide. The UAE will continuously keep its long term criterions for being responsible to its economic variegation and developments ( The UAE and Global Oil Supply, 2009 ) .
Major Oil Producing Fields in the UAE –
Location
Field
Discovered
Producing Wells
API Gravity
Abu Dhabi
Abu Al -Bukhoosh
1969
42
32.0
Abu Dhabi
Asab
1975
106
41.0
Abu Dhabi
Bab
1958
100
44.0
Abu Dhabi
Bu Hasa
1962
201
39.0
Abu Dhabi
Bunduq
1964
23
40.0
Abu Dhabi
Mubarraz
1969
28
37.0
Abu Dhabi
Sahil
1967
22
39.7
Abu Dhabi
Satah
1975
10
39.8
Abu Dhabi
Umm al-Dalkh
1969
32
32.5
Abu Dhabi
Umm Sharif
1958
142
37.0
Abu Dhabi
Lower Zakum
1963
131
39.0
Abu Dhabi
Upper Zakum
1963
142
35.0
Dubai
Falah
1972
25.5
–
Dubai
Fateh
1966
–
31.8
Dubai
Rashid
1973
141
38.0
Dubai
Margham
1981
10
43.5
Ra ‘s al-Khaimah
Saleh
1983
7
50.0
Sharjah
Kahaif
1992
4
50.0
Sharjah
Mubarak
1972
14
47.0
Sharjah
Saja’a/Moyeeid
1980
30
50.0
Beginning: ( Hellyer, 2001 )
Production and Militias:
Production:
S.No.
Particulars
Capacity
( 2011 )
Oil Production
3,096.34 ( Thousand Barrels Per Day )
Crude Oil Production
2,687.67 ( Thousand Barrels Per Day )
Natural Gas Production
1,811 ( Billion Cubic Feet )
Electricity Production
81.08 ( Billion Kilowatt-hours )
Entire Primary Energy
8.128
Beginning: ( United Arab Emirates )
Militias:
S.No.
Particulars
Capacity
( 2011 )
1.
Oil – proved militias
97.8 ( Billion Barrels )
2.
Natural gas proved militias
214 ( Trillion Cubic pess )
Beginning: ( United Arab Emirates )
OPEC members constitute about 75 % of universe petroleum oil as militias. As per the study by BP Statistical Energy, the refinery capacity of universe is 87913.34 1000 barrels in a twenty-four hours.
Organization of petroleum-exporting countries:
Background of OPEC:
When the understanding signed between five states viz. Kuwait, Iran, Iraq, Venezuela and Saudi Arab, the Organization of the Petroleum Exporting Countries ( OPEC ) was established in Baghdad in the twelvemonth of 1960 that is situated in Iraq. The central office of OPEC are situated in Vienna and after some clip other member states were added to OPEC subsequently on it comprises of 12 oil exporting states. The initial states are considered as Founder member whereas other member states are known as Full member states ( Members Countries ) .
The Organization of the Petroleum Exporting Countries ( OPEC ) is a inter authorities organisation those affecting 12 oil bring forthing states which are as-
Figure: List of OPEC Member Countries
State
Joined OPEC
Location
Algeries
1969
Africa
Angola
2007
Africa
Ecuador **
rejoined 2007
South America
IR Iran *
1960
Middle East
Iraq *
1960
Middle East
Kuwait *
1960
Middle East
Libya
1962
Africa
Nigeria
1971
Africa
Katar
1961
Middle East
Saudi Arabia *
1960
Middle East
United Arab Emirates
1967
Middle East
Venezuela*
1960
South America
Beginning: ( About OPEC )
Scholars divided OPEC member states into two states such as Minor and Major on the footing of population and hydrocarbon modesty. The states that have smaller oil modesty and big populations are comes under the class of minor OPEC states whereas major states have smaller population and larger modesty for hydrocarbons ( About OPEC ) .
Aims of OPEC:
The OPEC has been established with the intent of stabilising the oil monetary values in the member states and besides to enforce quotas in order to forestall incorrect and over use of resources. Further, more aims of OPEC are as follows-
To unite the schemes and policies for the member states in order to guarantee just monetary values of crude oil merchandises for the manufacturers.
To supply efficient and changeless supply service of crude oil merchandises to the consuming states.
Offer just sum on investings to the investing states.
Formulation of schemes and policies refering to the organisational map ( Levy ) .
Effectiveness of OPEC in accomplishing its Aims:
OPEC was foremost formed to maintain focal point on the oil monetary values and bridging the spread between demand and supply in the planetary market. But still manufacturer states are non followed the oil quota that ensuing in the complete production of oil from the permitted quota. As per the claims of OPEC, the fluctuation in the monetary values that appears are non due the alterations in demand and supply although the complete production of oil beyond the allotted quotas influences oil monetary values ( Sousa, 2011 ) .
OPEC and Oil monetary values in the Last 4-5 old ages:
The undermentioned figure shows the oil monetary values fluctuation in the worldwide with the attachment of OPEC dealingss that are associated with the production of oil-
hypertext transfer protocol: //gailtheactuary.files.wordpress.com/2012/02/world-oil-supply-and-brent-oil-price.pngSource: ( Why oil monetary values are so high: Production deficit, Iran concerns, and low involvement rates, 2012 )
It is analyzed from this above graph the oil supply is about changeless but fluctuation in monetary values reflects the over production of oil.
OPEC Quota and how it has changed Over Time:
The OPEC quota for the production of oil for UAE is 2.23 million barrels per twenty-four hours. It had become full member in 1967 and positioned at 6th topographic point among largest state for the oil militias globally. The exclusive purpose of OPEC was, supplying the stableness in the oil monetary values and to forestall from the overrun of oil which could take to the coating of oil militias earlier than expected. OPEC already decided the production quotas as per the demands of oil in the universe and could be modified by OPEC as sing to strategic determinations ( Sousa, 2011 ) .
Beginning: ( Sousa, 2011 )
Role and Influence of UAE within OPEC:
UAE became member of OPEC in 1967 and has been an active portion since 1974. It considered as major subscriber in the OPEC ‘s oil and energy industries. A chief focal point of U.A.E has been the cooperation between the manufacturers and consumers in order to efficaciously bridge the spread between demand and supply. In OPEC members, UAE and Kuwait are recognized as the Gulf States which have their economic system and finance construction that made it independent from oil monetary values whereas other Gulf States needed high oil monetary values which facilitates fund to their outgos ( OPEC ‘s Benefit for the Member Countries, 2011 ) .
It provides the changeless beginning of oil to the consumers of OPEC by supplying approximative 2.3 million barrels of oil per twenty-four hours. In add-on to the supply of traditional beginnings of energy, UAE besides contributes to supply new options of energy through significant development. ( UAE contributes to planetary energy sector: OPEC, 2010 )
Consequence of Quota Cut by OPEC:
A quota cut by OPEC will impact the economic recovery in planetary economic system. This quota cut is non assisting in commanding the monetary value fluctuation of the oil and gas industry even though it is increasing the job of over production. The hikings in the monetary values of oil will increase the monetary values of other trade goods ensuing in the addition in the rate of rising prices and decelerating down the economic development ( Pirog, 2005 ) .
Analysis:
Importance and Relevance of the Oil Sector in the UAE:
After analyzing the obtained informations, the UAE is an of import and important manufacturer of oil and keeping 7th place in footings of resources globally. The UAE is able to prolong itself in the planetary militias that owing to progress oil recovery engineering. The engineering combines with high oil monetary values to do militias more commercially feasible ( United Arab Emirates Energy Data, Statistics and Analysis, 2011 ) .
Statisticss of Oil Sector in United Arab Emirates:
S.No.
Particulars
UAE
Middle East
OPEC
Universe
Rank
1.
Entire Oil Production
3,096.34
26,872
35,160
87,110
7
2.
Crude Oil Production
2687.67
24,035
31,708
74,126
7
3.
Consumption
572.13
7,377
8,251
87,421
31
4.
Net Exports/Imports
2,524.21
19,496
26,909
–
208
5.
Refinery Capacity
773
7,245
8,987
88,097
24
6.
Proved Militias
( Billion Barrels )
97.80
753
1,065
–
7
Beginning: ( United Arab Emirates )
The policies and processs of oil in the UAE are foremost undertaken by authorities of the Supreme Petroleum Council through operating at each sector of oil and energy in UAE. The authorities has pushed back figure of its programs in order to increase production capacity of rough oil. UAE economic system, by its wealth in oil has recorded a stable growing over the last old ages ( United Arab Emirates Energy Data, Statistics and Analysis, 2011 ) .
S.No
Particulars
Capacity
2011
2010
2009
GDP ( Buying Power Parity ) :
$ 262.2 billion
$ 249.9 billion
$ 247.7 billion
GDP ( Real Growth Rate ) :
4.9 %
0.9 %
-3.3 %
GDP ( Per Capita PPP ) :
$ 48,800
$ 47,900
$ 48,900
Beginning: ( Middle East – UNITED ARAB EMIRATES )
Options to Oil Industry:
The limited handiness of fossil fuel and to forestall its overexploitation to run into the universe ‘s turning energy demands, assorted options to energy beginnings have been identified. Liquefied Natural Gas ( LNG ) is the approaching signifier of natural gas which provides an first-class option to conventional natural gas use. Another option in this context is the Gas to Liquid which is used in the readying of fuel as similar to diesel. Oil littorals besides provide a beginning of the extraction of oil from it and its usage is significantly increasing with clip. The lone modification factor is the increasing cost of puting up of the needed substructure and cost of excavation and extraction of oil from it. Besides the usage of oil littorals consequences in formation of noxious exhausts which adversely affect to planetary heating.
Bio-fuels have been the result of recent developments in scientific researches. In this the organic affair is used to deduce hydrocarbon based fuels such as Biodiesel, ethyl alcohol, etc. The traditional beginnings of energy include solar, air current and hydro energy all of which are renewable and 100 % environment friendly. ( Alternative Energy Sources – Man-made Fuels – Renewable Energy, 2011 ) .
Recent Developments:
In the initial one-fourth of 2012, due to the planetary supply the monetary values of rough oil leads to increase in crude oil merchandises. Factors which influence oil monetary values:
Changes in the outlook of planetary economic growing have been apparent in the planetary scenario wherein lower involvement rates in the European parts and feasible markets in parts like China have provided increased chances.
Distribution in the production of oil in the planetary market have been affected by the breaks witnessed in the production of oil in Yemen, Sudan and Syria and it is this loss which was responsible for the hiking in the monetary values of oil as seen on a planetary graduated table.
The production of oil has increased and led to the creative activity of stock lists of U.S. petroleum oil which farther increased the force per unit area on monetary values of oil ( Crude oil monetary values peaked early in 2012, 2012 ) .
Future Scenario:
Impact of Oil and Non-Oil Alternatives on the hereafter of the UAE:
UAE is preponderantly an oil based economic system wherein a important bulk of the income of the state is attributed to the sale of oil and gas trade goods and it is this income which has been fuelling the huge growing and development witnessed in the part. In order to cut down this dependence on the oil militias, the Emirati authorities has started concentrating on its non-oil sectors, particularly the existent estate industry, investing industry and touristry industry for bring forthing gross from non oil beginnings ( OPEC Long-Term Strategy ) .
Future programs of the OPEC and the UAE Oil sector and their consequence on the Economy:
To exert control on the production capacity and pricing of oil trade goods in the specified part.
To integrate the latest technological promotions every bit good as environmental alterations into the policy model.
To ask for engagement of international entities and besides to ask for investings in the oil sector operating in its part ( OPEC Long-Term Strategy ) .
Recommendations:
The induction of strategic confederations with international entities would be extremely good to the oil companies due to the possibility of engineering transportation and shared investings.
The assorted activities undertaken in the oil industry should be in conformity with green patterns so as to guarantee optimum use of resources.
The several authoritiess should endeavor towards cut downing the dependence on its oil based gross coevals by concentrating on the development on the non-oil sectors.
Decision:
Oil and Gas are the most important subscribers to the growing and development of GCC economic systems wherein it forms a major beginning of gross coevals. The part of the oil sectors has resulted non merely in the addition of the criterions of life in these parts but has besides provided the agencies by which the several economic systems may put themselves aboard other major economic systems globally. However, equal accent should besides be provided to the non-oil sectors which can supply some alleviation from the dependence on the oil sectors.
