Middle East: Dubai

MIDDLE EAST

Dr. A. F. Alhajji, Contributing Editor

UAE – Dubai

Despite higher oil prices, Dubai continued to diversify its economy. Diversification paid off, when oil prices declined sharply in 1998, yet the small emirate’s economy performed better than any other oil-producing country. Dubai is promoting tourism, financial services and other industries, to reduce its dependence on oil revenues.

The Persian Gulf Click for enlarged view

Drilling/development. The estimated number of oil wells drilled declined to eight in 1999. The number is expected to remain virtually unchanged.

Three factors are contributing to an increase in Dubai’s demand for natural gas – a growing industrial sector, a switch from oil to gas for generation of electricity, and the need for gas injection to drive EOR production systems. Because current gas supplies from Sharjah are not enough to meet future demand, several options were introduced, including a short-lived project to build a gas pipeline from the Khuff reservoirs offshore – it was abandoned in 1999. Other options are under development. One of these is a gas pipeline connecting Dubai to the main Abu Dhabi gas receiving station as part of the Dolphin project.

In the Dolphin Project, gas will be brought to Dubai from Qatar and Abu Dhabi. Most of the gas will be used in the Jebel Ali industrial development and to generate power.

Production. The emirate announced last March that its crude oil output dropped to 170,000 bpd, "making it one of the smallest producers in the region." From a 420,000-bpd peak in 1991, Dubai’s oil production has fallen steadily, declining to 250,000 bpd in 1998, and about 225,000 bpd in 1999.