Dubai has discovered a new oil deposit off its coast and expects to pump the first crude from it by early next year.
Dubai discovers new oil deposit
Dubai has discovered a new oil deposit off its coast and expects to pump the first crude from it by early next year. The oil strike, which the government announced yesterday, is the first hydrocarbons discovery in the emirate's territory in nearly 30 years. Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, "heralds the good news to the people of the United Arab Emirates that a new offshore oilfield has been discovered in Dubai", the Government said.
The Ruler's office said the find was east of the Rashid oilfield, a small offshore deposit that Dubai discovered in 1973, and might provide "a new source of income, enhancing the comprehensive development of Dubai". "I can confirm that oil has been discovered and expect production to start within a year," Sheikh Ahmed bin Saeed Al Maktoum, the chairman of Dubai's Department of Oil Affairs and Supreme Council of Energy, told Dow Jones.
Unlike Abu Dhabi, which holds more than 94 per cent of the UAE's 97.8 billion barrels of crude oil reserves and is a major exporter, Dubai is a net oil importer. The emirate's oil production - consisting of crude from a cluster of four small Gulf fields discovered in the 1960s and 1970s, and "condensate" from the Marghan gasfield - peaked at 410,000 barrels per day (bpd) in 1991 and had dropped to 80,000 bpd by 2007. In that year, the US government estimated Dubai's oil reserves at 4 billion barrels.
The Marghan field, discovered in 1986, is Dubai's only commercial onshore hydrocarbons reservoir. The emirate announced no further details about the new deposit. Its oil department would assess the size of the reserves and "define the possible energy production for the new field in the short and long term," Sheikh Mohammed's office said. Sheikh Ahmed, who is also the chairman of the government-owned Dubai Petroleum Establishment (DPE) and the chief executive of Emirates Airline, declined to comment on the potential reserves.
In light of the modest size of Dubai's previous offshore discoveries, however, the new field was not expected to be particularly large, said Robin Mills, a petroleum economist with the Dubai Government-owned Emirates National Oil Company. Dubai imports oil products from Abu Dhabi and elsewhere, as well as gas from Qatar, as fuel for transportation and power generation. It is developing a receiving terminal for liquefied natural gas and will start importing the supercooled fuel as early as September.
Even if the new oil deposit turns out to be too small to re-establish Dubai as a net oil exporter, it could still help the emirate cut its bill for fuel imports. Dubai has been struggling to meet its debt obligations in recent months, after the recession took a heavy toll on its overheated property sector. Sheikh Mohammed briefed other UAE officials on the oil discovery ahead of a Cabinet meeting in Abu Dhabi yesterday, his office said.
The Dubai Government reclaimed direct control of its petroleum assets in 2007, on the expiry of a 40-year offshore oil concession that had been held by a consortium of international oil companies led by the US company ConocoPhillips. It set up the DPE to manage the resources and awarded a contract to Petrofac, an international oilfield services company, for well and facilities management. Petrofac did not respond to questions submitted by e-mail yesterday.