UAE - Energy
Oil and gas production remains critical to the UAE economy, contributing about one-third of GDP and generating $75 billion in UAE exports last year. The industry is set for expansion as the UAE seeks to increase daily production from approximately 2.5 million to 3.5 million barrels a day within the next five years. Major downstream projects are also planned. American firms are major players in new onshore and offshore projects currently being implemented, including the $10 billion Shah Gas Filed project and modernization of production at the Upper Zakum offshore field where daily production of 750,000 barrels of oil is targeted. U.S. companies are also vying for a major onshore petroleum concession that expires after 75 years and is to be renewed in 2014.
By 2005 Dubai was operating under a permanent budget deficit, since its infrastructure costs were high and government revenues were low, depending on dwindling oil production and limited custom revenues. But Dubai's aggressive 2015 Strategic Plan targetted 11% per annum planned real GDP growth with a focus on the six key sectors in which Dubai views itself as having inherent advantages: travel and tourism, financial services, professional services, transport and logistics, trade and storage, and construction. In support of the Strategic Plan, Dubai's parastatal conglomerates and their many subsidiaries (as well as a bevy of private developers) have commenced a staggering number of mega-projects (according to Middle East Economic Digest, the value of planned and underway projects will exceed $300 billion over the next decade) targeting either directly or tangentially these six sectors.
Traditionally, oil revenues, along with careful management of investments, have helped the UAE avoid some of the budgetary problems encountered by other GCC states. The UAE has substantial foreign exchange reserves and the government has no foreign debt. There are no figures available for the amount of government assets held overseas, but many experts believe the Government of Abu Dhabi maintained $200 billion to $250 billion under the administration of the Abu Dhabi Investment Authority.
he United Arab Emirates (UAE) was the world's sixth-largest oil producer in 2014, and the second-largest producer of petroleum and other liquids in the Organization of the Petroleum Exporting Countries (OPEC), behind only Saudi Arabia. Because the prospects for further oil discoveries in the UAE are low, the UAE is relying on the application of enhanced oil recovery (EOR) techniques in mature oil fields to increase production. Using EOR techniques, the government plans to expand production 30% by 2020. EOR is an expensive process, and at current prices, these projects may not be economic. However, despite today's low oil prices, the UAE continues to invest in future production.
The Upper Zakum oilfield is one region that has been targeted for further development. The field is the second-largest offshore oilfield and fourth-largest oilfield in the world, and it currently produces about 590,000 barrels per day (b/d). In July 2012, the Zakum Development Company awarded an $800 million engineering, procurement, and construction contract to Abu Dhabi's National Petroleum Construction Company, with the goal of expanding oil production at the Upper Zakum field to 750,000 b/d by 2016. Production from the Lower Zakum field should also increase, with oil production eventually reaching 425,000 b/d, an increase from the current level of 345,000 b/d.
The UAE produced 1.9 trillion cubic feet (Tcf) of natural gas in 2013. A top-20 global natural gas producer, the UAE also holds the seventh-largest proved reserves of natural gas in the world, at slightly more than 215 Tcf. Despite its large reserves, the UAE became a net importer of natural gas in 2008 as a result of two things: the UAE reinjected approximately 30% of gross natural gas production in 2012 into its oil fields as part of EOR techniques, and the country's rapidly expanding electricity grid relies on electricity from natural gas-fired facilities.
China’s Silk Road Fund acquired a 24.01% equity interest in the 700MW DEWA concentrated solar power (CSP) project in Dubai in July 2018. The DEWA CSP project, which was awarded to an ACWA Power led consortium in 2017, is the 4th phase of the Mohamed bin Rashid Solar Park, the largest single-site concentrated solar power plant in the world. The project uses a state-of-the-art combination of a central tower and parabolic trough technologies to collect energy from the sun, store it in molten salt and produce steam as required to generate electricity during the day and throughout the night.
Paddy Padmanathan, CEO of ACWA Power, said “This co-investment also is in keeping with our investment strategy of efficiently deploying our own capital to retain a meaningful level of equity interest in each project that is sufficient to permit us to be the long-term investor with de facto control over the investment and for us to remain focused on reliably delivering electricity and desalinated water at low cost.”
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