Oil and Energy Industry in UAE Essay Example | Topics and Well Written Essays - 1750 words

Oil and Energy Industry in UAE - Essay Example m.) respectively and hence world's fifth and fourth largest respectively (Khalil 2009). UAE is OPEC's third largest oil producer and currently pumps 2.4 million b/d (Khalil). UAE projects to enhance upstream as well as downstream production capacities (Energy Information Administration 2007). Historically, oil, and recently natural gas, has contributed vitally to UAE's overall economic development and growth (UAE Federal e-Government Portal 2006). Currently, energy sector, especially oil and gas, contributes as much as 62% to UAE's overall economy (UAE Federal e-Government Portal). Essentially, Abu Dhabi holds sway over UAE's oil capacity both in overall production capabilities and proven reserves (9.2 billion barrels) (EIA). Moreover, Abu Dhabi National Oil Company (ADNOC), UAE's largest state-owned company, dominates production (EIA) and controls UAE's quota prescribed by OPEC (EIA). Notwithstanding plans to diversify economy (Abu Dhabi Economic Vision 2030 n.d.), UAE continues to rely on oil and gas as major sources for state revenues ("Non-Oil Sectors Ac... This, in fact, poses serious challenges for an economy whose performance has depended largely on international oil markets (Husain, Tazhibayeva, and Ter-Martirosyan 2008). Moreover, not only has economic performance in an oil-rich country such as UAE depended on energy sector's positive or negative shocks but fiscal policies seem to strongly correlate with oil prices as well and hence impact positively or negatively, depending on fluctuations in oil prices, non-oil production sectors (see fig. 1). [Insert Your Last Name] 3 Fig. 1. Husain, Tazhibayeva, and Ter-Martirosyan Indeed, a growing body of analyses and government reports (Boer & Turner; Abu Dhabi Economic Vision 2030 ) have repeatedly stressed significance of and implications for economic diversification in Gulf Council Countries (GCC), of which UAE is a member. The case for diversification in UAE is even more pressing given UAE's reliance on Abu Dhabi and Dubai as leading engines for country's economic growth (O'Sullivan 2007). Further, given each emirate's autonomous status according to constitution (O'Sullivan), UAE cannot enact a universal and binding economic policy unless political authority steps in. This is, again, particularly true given Abu Dhabi's and Dubai's attraction force as opposed to remaining emirates' fading allure, especially to youth. So far, Abu Dhabi and Dubai, UAE's leading economies, both have managed to maintain healthy economic growth rates according to each emirate's strategic vision. [Insert Your Last Name] 4 However, overall, UAE's leading economic sector, i.e. energy and oil, seems to project growth in oil production capacity (see fig. 2) and increasing foreign