Abu Dhabi's oil reserves projectedtolast another 150 years ......the authors ofthe report. Exports...
Transcript of Abu Dhabi's oil reserves projectedtolast another 150 years ......the authors ofthe report. Exports...
Emirates Business 2417. Wednesday. March 31. 2010 61 News
dreds ofbillions ofdollars of investments. According to the IMP, the UAEheld an international investment posi- . tion (lIP) with net assets of $305 billion (Dhl.l trillion) of international assets in 2009 and the great majority of them are owned by Abu
. Dhabi entities. The ratio of lIP net assets
over UAE's GDP is 132 per cent, compared to 105 per cent for Singapore and 52per cent for Norway."
on the strong hydrocarbon· Abu Dhabi has traditional
" Abu Dhabi's aim is to stimulate non-oil sectors rather than to reduce activity in the oil sector Isthmus Partners
serves. Based on current utilisation rates and no additional discoveries, Abu Dhabi's oil reserves will last for 150 years, said the report.
According to the IMP estimates, the UAE produced 2.62 million barrels of crude oil per day on average in HI 2008, 97 per cent of which was produced in Abu Dhabi.
As a result, oil exports generate significant income for the emirate.
In 2008, export revenue from oil arid
• Emirate is blessed with 95 per cent of the UAE's oil reserves and 92 per cent of gas . It has the second-largest economy in the Gee
Abu Dhabi's oil reserves projectedtolast another 150 years,says areport
ABU DHABI Shuchita Kapur
Oil-rich Abu Dhabi is on a strong growth trajectory and the emiratewill remain in a strong economic position in the future, too; after having weathered the 'economic downturn considerably well.
The figures quoted in a new report by Isthmus Partners ~u Dhabi Investment Environment', shows that with 33per cent ofthe country's population, the emirate gas was contributes around 60 per cent to the UAE's GDP and has a GDP per capita of 1.8 times the national average.
"Abu Dhabi has one of the highest GDP per capita in the world. Even on a standalone basis, Abu Dhabi would be the second-largest economy in the GCC after Saudi Ara- . bia,' said the authors of the .report stressing the econom
. ic clout of the capital city. . The emirate is blessed
with 95 per cent ofthe UAEs proven oil reserves and 92 . per cent of UAE's gas re
Dh376.9 billion, but in 2009 this figure was reduced to Dh208.5bi1 due to the drop in the price of oil and the global economic recession.
With good revenues coming from the hydrocarbons, Abu Dhabi is also trying to diversify its economy.
"The government has intensified the diversification efforts in recent years capitalising on the 2000s oil boom and the increased.inflows of foreign investrnent.t'said the report, adding that the "emirate's strategy is to capitalise
sector and grow into other industrial sectors as well as tourism and aviation".
The emirate is also home to one of the :world's leading sovereign wealth funds, Abu Dhabi Investment Authority, which is a strategic international investor.
The report said: "Although official figures on assets under management are not forthcoming, it is.considered that the Abu Dhabi InvestmentAuthority (Adia) and Abu · Dhabi Investment Council (Adic) hold hun
ly invested a considerable amount of its oil revenues abroad and such international investments provide a significant source of income to the Abu Dhabi Government and reduce the volatility of the emirate's GDP and dependence on oil prices , said the authors of the report.
Exports of oil and gas brought $102.7bn to the UAEin 2008 and a projected $56.8bn and $71.8bn in 2009 and 2010 respectively, according to the IMP, as quoted in the report. The year
2008, which was probably one of the best in terms of economic growth, saw the UAE's consolidated fiscal surplus reach a record high of Dh127bn due to strong oil and non-oil revenue, even though consolidated government expenditure increased to a record of Dh1?8bn, as per the data in the report.
"The UAE reported fiscal surpluses for four consecutive years from 2005-2008 (while previously it had several years of fiscal deficits due to low oil prices and a steady .
growth in public spending and infrastructure).
"Asmall fiscal deficit of0.3 per cent of GDP is predicted for 2009 due to lower oil prices and an expansionary fiscal policy by Abu Dhabi to counteract the economic slowdow n: The IMF forecasts that the UAE willreport a surplus in 2010."
Given the economic growth, Abu Dhabi's population has increased rapidly in recent years , . primarily through immigration of expatriates. "Resident popula
• Populat ion by emirate,2005 census
Emirate Total Citizens Non- % Non-population Citizens Citizens
AbuDhabi , - -_ 1.399.1:.8~ 3?0, 227 1.049.207 - 75.0%-...Dubai ' - ·. i;3~1 .4~3 13Z573 .'1.183.@ 0 :- 8 9.6% -.Sharjar ··----793 -. 138:272 . ·655.36f" .- 82.'6%~573- r : _ . .. .;:- ___ ...:;,. _ _ .. =- -... <;. ' .lo": .r< , . . - '~
Ajman 206 ,997 39.2}1 .167,766 _ _ ~b9.!'~ .- .- ." ~.
Uir)m.ALQuw@jn.;" .; __~~iJ9, .• ~l5 ,873 :3.3:~8ELJ.'""::67.70/0
Rjls AI.Khaimah ,;". - 21Q.063 87;848~ -~lf·2",?1.5~~_ '§§2J~
Fujairah .• ·125.698 56.421 . . 69.277 _ .55.1%
1M WI ;see EiSa.
• GOPper capita of AbuDhabivs other countries (Rea/2005 $ '000) . Ranking
(out of 181)
Norway • - - - ~ -- - .:...J 64.0 2
3
5
7
19
21
Canada
UAE 23 Singapore .":" ';:'====::;i
I .'
-;~ 25 KSA - 13.4 37
Oman 8.5 47
o 10 20 30 40 50 60 70 80
• GOPbreakdown by economicsector (Real 2005, $)
28% 30%33% Other
· 9-% Financialservices 7% Constructionand utilities
• Government services
• Manufacturing
• Mining:quarrying andenergy
GCC ..AbuDhabi Norway Canada G7
Least Most diversified diversified
• Breakdown of Abu DhabiGOP, 2008F • Populationgrowth CAGR 1997-2007
Germany I0.1% .
UKlo.4%
US _ 1.0%
GCC
AbuDhabi
3.2%
5.0%
I I I I I o 2 3 4 5
Source: Isthmuspartner
OilandgasGovernment services
. Manufacturing -_.
Financial services -_.
Wednesday, March 31,2010 .Emirates Business 2417
tion grew by a compounded average of4.6 per cent annually between ZOO1and Z006. Between 2005 and 2008, the emirate grew at a faster annual rate of six to seven per cent. Anecdotal evidence suggests that the population increased mildly in Z009 and Z010, as Abu Dhabi remains a net employer." _
In recent geve lopme~Fs ,
Abu Dhabi was also hit by the global credit crunch. . "The oil growth engine
(centred in Abu Dhabi) and the non-oil growth engine
(centred in Dubai) were hit at the same time driving the country into mild negative real GDP growth in 2009, forecast at -0.7 per cent by the IMF."
However, it was asofter landing. "Though at the beginning ofthe financial crisis many' participants expected that Abu Dhabi could be immune to shocks, the reality is that the crisis has affected Abu Dhabi thoughtoa smaller degree. _ . "In the real estate sector,
Abu Dhabi has expanded
more conservatively and has a better match of demand with supply. In many segments of the property market, Abu.Dhabi is still undersupplied. Yet the UAE'scapital experienced areduction in real estate prices in·Z009. Prices in prime residential properties have fallen 40 per cent between Q3 200S-and Q3 2009," said Colliers.
Rental levels have fallen by an average IS per cent in the first three months of Z009, but had previously increased by 1:1- per cent in Q4 200S.
"Occupancy rates in Abu Dhabi are almostIou per cent and supply of completed property (rather than offplan) cannotsatisfy demand. Yet rental prices have been dropping since Southern Dubai has emerged as a substitute to Abu Dhabi."
As far as the banking sector is concerned, the central government has moved proactively in easing the liquidity problem and restoring confidence ill the system.
Other sectors of Abu Dhabi'~ economy are performing well. The return of oil prices to the $70-$SO a barrel level has boosted oil revenues. "Industrial demand and revenues have fallen due to the slowdown in global activity and local construction, but investments in this sector continue.
"Abu Dhabi will capitalise by increased industrial export revenues once the global economy resumes expansion . In the meanwhile, the emirate benefits from carrying out its infrastructure investments at reduced cost due to the drop in the price of construction materials and labour costs."
Abu Dhabi has 'also indi
cated that the government ' and the emirate will continue supporting troubled gov- : ernrnent-related entities ' given that they are sustain- . able businesses, the report points out.
With a GDP of Dh5Z0bn in 200S, the emirate is a strong economy. Yet, Abu Dhabi isone ofthe most concentrated economies in the GCe, as the oil sector dominates economic output and any major fluctuations in oil price can impact it .
Thus, diversification is in a major way and the emirate has invested large amounts of capital in broadening the economic base. .
"Abu Dhabi has intensified efforts embracing the two pillars of diversification and I privatisation.Tntroducing I strategic measures and undertaking substantial new in- \ vestments in industry, real estate, tourism, aviation and other-sectors .
"Abu Dhabi targets an annual growth of 7.5 per cent; The emirate published in 2009 the 'Abu Dhabi Economic Vision 2030' outlining its economic priorities for the coming years and its policies over the next two decades to achieve its goals.
"The plan envisages a population of 3.1 million by 2030, an SOper cent increase from an estimated 1.7million people in 2009," it said.
"Abu Dhabi's aim is to stimulate non-oil sectors rather than to reduce activity in the oil sector. It is increasing its industrial base [petrochemicals, plastics, metals] capitalising on the availability of resources.
.In addition, it is looking to boost tourism and aviation sectors amongst others.
On sector analysis ofthe AbU Dhabi economy, the Abu Dhabi Investment
.Environment report highlights that Abu Dhabi aims to become the Middle East hub for industrial aDd manufacturing companies seeking to
. capitalise on the numer. ous opportunities that
the emerging economies of the region offer; .
"The government envisages exploiting the
. emiratescompetitive.advantage in the energy sec" tor and cqmmanda largo . er share of the hydrocarbODS value chain.
''According to the Abu Dhabi Chamber ofCOme merce, in~estmeitisin in dustrial projects reached Dh39.8 Billion in 2008."
The construction sector is another important one to.watch out for. It Cotltribute<fDh2tbn to Abu Dhabi's GDP in
2008. Construction activity is still strong-as there are massive infrastructure projects under devel
-opment , Growth in real estate construction has slowed downbutfundamentals are good, said the.report. .
. "There are massive . government orgovernmerit-related investments in shipyard, seaport, airport expansions, healthcare, education, majorroad upgrades and transportation. . ' ..
. "Infrastructure investment makes upa sigllifi
.cant'arid growing proportion ofconstruction ac
' . tivity for Abu Dhabi and the GCe," it said. .
Developments in transport are also come mendable. Abu Dhabi's
. new port is under construction and will include one ofthe world's largest industrial zones. .
The emirate has also .ices in order to develop a undertaken a massive ex- military-aviation-maintepansion project for its~ mince centre," the report main airport~said.Abu Dhabi is alsoin- :
Aerospace arid defence vesting considerably in are also important pillars the tourismsector as a for Abu Dhabi's diversifi- means ofdiversification, cation plans. , T4e government has
"In the.third quarter of • undertaken big initiatives 2009., Mubadalaan
. nounced that it had ' . . signed along-termstrategic aerospaceagreement with Boeing to develop .mutually beneficial illitiatives in various areas ' including composite ... . manufacturing, engineering, R&D, commercial - . maintenance, repair and overhaul, military maintenance and sustainment, arid pilottraining.
"Inthe first quarter of 2009, Mubadala had announced that it isin the initial stages offorming a joint venture with the . United states company Sikorsky Aerospace Serv
in tourisminfrastructure, .' '. including the airport ex~ .
~ pansion and iconic master developments, such as Sir Balli Ya~ Island (home to the Yas Marina.Circuit
'. already hostingthe Abu Dhabi Grand Prix) and . Saadiyat Island (home to the AbuDhabi Louvre and Abu Dhabi Guggen'heim that Wi11 be com- . pleted in2012).
The cityhas been developingspecialised eco
.nomiczonesin strategic locations to attract investments. :
The emirate has . launched huge projects to diversifyitseconomy,
~