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ABU
DHABI, United Arab Emirates--The discovery
of oil in the United Arab Emirates literally
fuelled the impressive modernization of
the tiny Gulf state. Though evidence of
oil in the region dates back thousands
of years, it had minimal value as a natural
resource. It wasn't until the rise of modern
industrialization that a high price was
placed on petroleum fuel. In the years
leading up to World War I, oil companies
began their expeditions to Iran, Iraq and
the northern Gulf to locate oil sources.
The war and the defence technology industry
ultimately generated a high demand for
petroleum. This demand heightened the interests
of many companies around the world to search
for new oil fields. In these early stages
of the oil industry in the 1920s and 1930s,
the ancestors of Shell and British Petroleum,
among others, made their first forays into
the gulf region.
In
the 1930s, American and European oil companies
were actively exploring the Gulf region. In
1935 the Sheikhs of Abu Dhabi, Dubai, Sharjah
and Ra's al-Khaimah were approached by the
D'Arcy Exploration Company, a subsidiary of
the Anglo Persian Oil Company (APOC, now British
Petroleum) to grant it rights to explore the
Trucial Coast for oil reserves. The next year,
a team of geologists from APOC came to the
Trucial states to examine the coastal areas
for petroleum reserves. The explorations continued
in what is today the UAE throughout the 1930s.
World War II put a halt to this work, however.
Finally in 1950, the first drilling rig was
erected in the Emirates at Ras Sadr by APOC.
Having reached a record-Middle East depth of
13,001 feet, drilling at the Ras Sadr site
was completed 13 months later. The drilling
struck no oil, but the process brought out
the Abu Dhabi locals and engaged them in an
introduction to the oil industry.
In 1960, the first successful oil field was
discovered in the Trucial states. The Bab field,
located in Abu Dhabi, proved to cover a wide
area with a healthy supply of crude oil. The
development of the area spurred a host of employment
opportunities for Abu Dhabians and led to continuing
exploration of other oil fields around Abu
Dhabi and other the other Emirates. By 1962,
oil started to be exported offshore from the
Emirate.
Abu Dhabi became a member of the Organization
of the Petroleum Exporting Countries (OPEC)
in 1966. When the United Arab Emirates was
formed in 1971, membership was transferred
to the new nation. The oil industry was not
unified in the new state, however. Each emir
was in charge of concessions, exploration,
and oil field development in his own Emirate.
In that year, the government of Abu Dhabi formed
the Abu Dhabi National Oil Company (ADNOC)
to oversee all petroleum related affairs. In
1978, the Abu Dhabi Company for Onshore Oil
Operations (ADCO) was formed to In 1988 a presidential
decree abolished the Department of Petroleum
and dissolved the board of directors of the
Abu Dhabi National Oil Company (ADNOC). The
supervision of the oil industry in the UAE
was then taken over by the new Supreme Petroleum
Council, whose eleven members were led by Sheikh
Khalifa bin Zayed Al Nahyan. Under the UAE's
constitution, each emirate controls its own
oil production and resource development.
Today, the UAE contains proven crude oil reserves
of 97.8 billion barrels, or slightly less than
10 percent of the world total. Abu Dhabi holds
94 percent 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.
The UAE's current OPEC production quota is
2.03 million bbl/d, and its crude oil production
is the third quarter of 2001 was 2.15 million
bbl/d. The UAE's total capacity is 2.65 million
bbl/d, making it second only to Saudi Arabia
for excess production. The UAE has the third
largest oil reserves in the world, after Saudi
Arabia and Kuwait.
The UAE has two refineries operated by ADNOC
and four smaller refineries. The UAE's natural
gas reserves of 212 trillion cubic feet are
the world's fifth largest after Russia, Iran,
Qatar, and Saudi Arabia. It is currently developing
the Dolphin Project, which aims to develop
links between the natural gas infrastructures
of Qatar, the UAE, and Oman, with a possible
future link to the Indian Subcontinent. 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.
The oil export revenues of OPEC's 11 member
states for 2002 are projected to be $178 billion,
a 7 percent decline from 2001, and 27 percent
down from 2000 revenues. For the UAE, this
would mean a decline from $18 billion in 2001
to about $16 billion this year. OPEC members
are: Algeria, Indonesia, Iran, Iraq, Kuwait,
Libya, Nigeria, Qatar, Saudi Arabia, United
Arab Emirates, and Venezuela .
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