Oil and Dubai: the Future

Dubai has grown tremendously since the sixties. The initial growth was fueled by the discovery of oil . In fact the early sixties was the period when Oil was discovered in Dubai. The oil fields were however not located on the Dubai coast proper but on the ocean reef at a distance of about 115 km from the shore. These were the off shore oil fields. This discovery transferred the economy of Dubai as well its neighboring states.
Oil continued to serve as the catalyst for the economy as by the early seventies the oil prices soared to astronomical levels. This quickly transformed Dubai from a relatively less affluent state to one of affluence. The oil revenue also laid the foundation for the growth of Dubai. In fact an economic boom did take place and that too in a very short time. The scale was also nothing short of gigantic
The Dubai rulers realized that perhaps the oil boom will not last forever hence they thought of making Dubai a financial hub. For there is no doubt that Dubai’s oil reserves have reduced over the past decade and are now not expected to be active beyond a maximum of 20 years. The main fields are offshore: namely Fatah, Southwest Fateh and two smaller fields, Falah and Rashid. There is one onshore field at Margham .
The main operator of the oil in Dubai is the Dubai Petroleum Company. This company has monopoly. Gas is not much in abundance and Dubai is rated to have only a 2 per cent share of the UAE’s gas reserves. The state-owned Dubai Natural Gas Company (DUGAS) is responsible for processing natural gas produced in Dubai’s offshore oil fields as well as the gas piped from Sharjah.
Presently the oil in Dubai is trickling down. In addition it has a paucity of fresh water. Arable land is also at a premium and limited. Yet it is a major financial center.. Mohammed the present Dubai ruler has been told that Dubai’s four billion barrels of oil reserves would be exhausted by 2016 if the 1990 levels of production at four billion barrel is continued.
One must be clear that Dubai has only two percent (at about 80,000 barrels a day now) of the about 98.2 billion barrels of UAE’s oil, and oil contributes to less than six percent of its economy. But despite oil going out of the economic system still Dubai became a financial market. This was an attempt to take oil out of the system and rely on other parameters. There is now doubt that up to a point Dubai became a financial centre till the economic bust late last year… But real estate proved to be the stumbling block. Dreams of grandeur cannot succeed just on sand. Analysts believe that the correction had to happen as the debts were growing and growing.
This is the genesis of the present economic defaults.oil fueled the economy but now it accounts only for 6% of the gross revenue. Dubai may be in trouble in the long run in the next two decades.