Future Of Oil Industry In UAE And Its Challenges

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Question :

Write the notes on the topics:

  1. Growth of NON-Oil Sector in UAE and its challenges
  2. Future of OIL Industry in UAE and its Challenges
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Answer :

Introduction of the topic

The revenue that is obtained from the export of oil had caused a rapid transformation of UAE from a backward desert region into a region that has high prosperity and strong economical background. Out of the total world reserve UAE possess 10 percent of the share and there is no doubt that the prosperous oil industry of the nation would continue to make future growth. However oil companies operating in the concerned region with the aim to make a future growth have been facing some issues that have developed as challenges for the industry. 

The researcher therefore in the understated study tries to demonstrate an in detailed research that would shed light on these challenges and about the future growth of the industry. With this concerned research study the researcher would also like to demonstrate the present scenario of the oil industry of United Arab Emirate and the scope of it’s in the near future by mitigating the challenge that it has been facing as an economically stable and prosperous industry. The researcher undertakes the research study by considering varying sections. At first initiating with by providing an illustrative view of the previous literatures in regards to the same topic. Then continuing with the collection of data and methodological part ending with the analysis of the findings obtained from the data collected and a precise conclusion to the study (Parra et al. 2017)

Background of the study

The nation of United Arab Emirates is recognized to be one of the most important geographical locations of the Persian Gulf Region when it comes to oil production and export. After Saudi Arabia the United Arab Emirates is typically considered to be one of the most relevant actor in the global oil market. Therefore with a large percentage of the world’s total oil reserve it is evident that the oil industry of UAE has the ability to provide economic growth and even expand its social services for a several more decades. As the industry holds a significant importance in the development off UAE in upcoming years it would develop as fuel source of power generations, petrochemicals and even manufacturing industry. 

In order to make its expansion roots strong the nation has also undertaken the initiative of developing an intra Gulf gas network that could formulate a link with the Indian Sub continent as well. Oil has been considered to be major source of energy from more than a decade now however policy makers and the public are now tending to re asepses the role they play in the modern life. However the enormous economic contribution the oil industry makes to the concerned nation inevitably makes its future of critical significance to the UAE community. The Oil Boom in between the year 2000 and mid 2008 generated a large volume of revenue for six of the major countries of the Gulf Cooperation Council in which the nation of United Arab Emirates has been veer much a part of. Among all the major countries of United Arab Emirates it was Abu Dhabi supported by Dubai that acted as a transforming agent fir in the nation in the global oil export market. In 2000 the proven recoverable oil reserves were put at 98.8 billion barrel therefore with this the UAE turned out to be a major player in the international oil export market (Khatib, 2014). 

Low Cost Curve of Future Oil Supply

Figure 1: Low Cost Curve of Future Oil Supply

(Source : Khatib, 2014)

Problem Statement

However with rising concerns for future demands, climate change, the cost of project development, governance, and price value etc the oil industry of UAE finds itself into a delicate situation. Despite the great oil windfall UAE like Gulf countries are continuously facing some challenges that often restrict the growth of the industry in the future. The oil industry in UAE as it slowly tends to increase their output, efficiency and contribution from both corporate as well as country standpoint has been facing a range of challenges. The energy and resource industry has been the backbone of the nation in recent years with increases in the global oil demand and rising prices. 

However the challenges have developed as major impedance to the industry’s growth in the concerned nation. The oil industry has played an instrumental role in the economic transformation and mobility in everyday life of majority of the UAE’s Population. The development of the modern society was somewhat dependent on oil in the 20th century. Therefore with this major aspect the era was considered to be the Age of Oil. Therefore with such significance value in diverse aspects (especially in focus to the nation of UAE) it was quite evident that nation has great scope of opportunities for the industry to establish itself as one of the major industries of the global market. Only by recognizing the true scope of these ongoing challenges and their implications the industry could continue to maintain its consistency in an increasingly complex world. Therefore with this major aspect the concerned research study would be developed by the researcher (Ewers, 2016).

Aim and Objective 

The major aim of the concerned research study is to illustrate ‘The future growth of the Oil Industry and the challenges faced by it’. With this precise aim of the study the major objectives of the study has been depicted. The objectives are as follows:

  • To determine the future growth of Oil industry of UAE
  • To evaluate the challenges faced by the oil industry in UAE
  • To assess the need of recognizing the challenges and its implications on the industry
  • To propose a study in concern to the topic for future significant research 

Review of literature


According to Jamil et al. (2016) the significant role of UAE nation’s oil exports refers to their large domestic resources which have been cost efficiently exploited. As United Arab Emirates has been continuing to become one of the major producers of oil therefore it had been quiet evident that nation’s economic value or rather status was largely dependent on it. UAE’s oil industry however with such strong presence faced some common challenges but in varying degrees. Therefore in the concerned literature review tries to demonstrate the future growth of the oil industry and the challenges it had been facing. With evaluation of previous research work the researcher would be able to develop the foundational base of his own research study on the same topic and conduct the study in a more precise.

Development of Oil Industry in United Arab Emirates 

In the perspective of Diasty et al. (2013) the biggest deposits of oil have been found to be in the nation of United Arab Emirates. With the beginning of oil exports in the late 1950s and early 1960s the nation was till then regarded to be an undeveloped desert region that is inhabited by the nomads, pearl divers and fisherman. In accordance to Espinasa, (2017) the nation of UAE were late starters in the oil export business. It was mostly during the initiation of the Second World War in 1939 the idea of oil being under the desserts strike. After the war the focus was enrolled on the exploration work in the nation along with other Gulf Countries. With this exploration project the nation underwent a revolutionary change and that was marked as the beginning of the economically flourishing industry of the nation. As per the opinion of Parra et al. (2017) UAE with the emergence of the oil industry gradually enjoyed a high standard of living with public services and amenities as advanced as any nation in the world.

Crude oil price index

Figure 2: Crude oil price index

Source: (Basher et al, 2017)

The Oil Industry of UAE gradually turned to attain a leading status in the global market by exporting oil internationally. With increase in the demand and supply oil was positively responded by the oil industry of UAE. As per the view of Basher et al. (2017) in the year 2000 the Organization of Petroleum Exporting Countries under its revenue oriented strategy believed that the oil was more valuable under the ground than on the ground therefore worth this the oil companies of UAE responded well and maximized adding as many as reserves as possible. 

Future Scope of Oil industry in UAE 

In accordance to Herb, (2014) oil had been underpinning the development of UAE by far and would continue to demonstrate their growth signs in the nations’ development. The oil industry as per the opinion of previous literary researchers will be playing an increasingly big role for the nation growth and development. This was evident from the fact that the concerned industry had valuable amount of scope in the future. Kelland, (2014) stated that UAE not only had its own vast reserves but it had also taken the initiative in developing a the nation as a hub that would deliver as a supply of network and this would in turn benefit the entire Gulf region and even possibly other counties as well but at a later stage. Some of previous renowned scholars stated even though the challenges are huge but for the oil industry there are viable opportunities lying ahead. 

There have been very limited industrial activities have the opportunities that the oil industry of UAE offers to develop and deploy technologies, enhance development and remunerate large sum of capitals. The combination of high skilled laborers, innovative technologies have been will continue to be the key factor for finding and developing the source of oil in the most challenging environment. This woul