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Oil and Gas revenues has been the mainstay of UAE’s economy accounting for one- third of the country’s GDP. Sitting atop 8%of the world’s proven oil reserves (97.8 bn barrels) and almost 5% of the world's natural gas (5.8 trillion cu meters); the UAE's extraordinary hydrocarbon wealth gives it one of the highest GDP per capitas in the world. UAE is a member of the Organization of the Petroleum Exporting Countries (OPEC) since joining in 1967. The emirate of Abu Dhabi is the centre of oil and gas industry followed by Dubai, Sharjah and Ras Al Khaimah. Abu Dhabi owns the lion's share of the oil and gas resources - 95% of the oil and 92% of gas.

Abu Dhabi is the heart of UAE's hydrocarbon and industrial power. Abu Dhabi National Oil Company (ADNOC) is the largest state owned company; it operates 17 subsidiaries and has the right to take up to 60% share in all new major oil projects. The Abu Dhabi National Oil Company asserted in August 2006 that the UAE is presently ready to expand production of crude oil to 2.8m barrels per day (bpd) and is targeted to push production to 4m bpd.. Given these vast resources, oil and gas continue to play a crucial role in the country's economic profile.

Principal offshore oil fields are Umm Shaif, Lower Zakum, Upper Zakum, Al Bunduq and Abu Al-Bukhoosh. The main onshore fields are Asab, Bab, Bu Hasa, Sahil and Shah. Almost 92 per cent of the country's gas reserves are also located in Abu Dhabi and the Khuff reservoir beneath the oil fields of Umm Shaif and Abu al-Bukhoosh ranks among the largest single gas reservoirs in the world. The UAE exports majority of its crude oil to Japan making it the UAE's largest customer. Gas exports are almost entirely to Japan, the world's largest buyer of liquefied gas, with the UAE supplying almost one-eighth of Japan's entire requirements.

GLOBAL OIL MARKET

The oil market in the end quarter of 2008 and 2009 has been strongly impacted by the financial crisis, global recession and resulting erosion in world oil demand. These factors have substantially magnified the uncertainties affecting the market and contributed significantly to volatility.

World oil demand forecast in the next few years is expected to show the following trends:

• World GDP will grow at a slow pace from the contraction. • Apart from the slow economic recovery, various factors will slightly thin oil demand growth in Asia such as the removal of price subsidies, fuel switching and energy conservation programmes. • There will be stronger utilization of nuclear power plants and usage of biofuels is expected to grow rapidly, adding another 0.15 mb/d. • The world will see strong movement toward use of smaller and more economical vehicles, due to which most of the growth in oil usage will be in the transport fuel and petrochemical sectors. • Industrial oil consumption will show only moderate growth as a result of delayed and slow economic growth. • OECD economic recovery will be moderate and steady.

EVOLUTION OF THE OIL MARKET

Since its discovery in 1859 by Mr. Edwin Drake, oil's application and value in daily life has increased. The earliest deposits of oil were found in the United States, first in Pennsylvania and Ohio then in 1901 with larger reserves in Texas and Oklahoma; the same year Arabian/Persian Gulf exploration began. In 1901, Mr. William D'Arcy, a British businessman, was awarded a 60 year exploration, extraction, and sales concession from the Persian (Iranian) government. D'Arcy in return paid 20,000 and 16% of the profits to Persia. The importance of oil is seen as early as 1905 when the British government provided financial assistance to D'Arcy to prevent bankruptcy, fearing the concession's sale to another government. In 1908, larger oil deposits were discovered.

Between 1908 and 1944, oil reserves were discovered throughout the Gulf region. In 1944, Mr. Everette De Golyer, a prominent petroleum geologist, submitted a...
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