The UAE and Global Oil Supply

With the world’s seventh largest proven crude oil reserves, the UAE is a responsible producer and critical partner in global energy markets. As a mainstay to the economy, oil exports now account for about 25 percent of the UAE’s gross domestic product.

In addition to being an important supplier of energy, the UAE is now becoming an increasingly relevant consumer of energy. The UAE will continue its long tradition of responsible energy stewardship as it develops and diversifies its economy, accelerates the development of additional hydrocarbon reserves and contributes to the development and implementation of alternative energy sources.

Seeking Innovations to Improve Efficiency

Much of the UAE’s current crude oil production is made possible by the reinjection of natural gas to boost pressure in the nation’s major oil reservoirs. Without this massive program, the UAE’s crude production would stagnate and decline. The UAE is also testing carbon capture and sequestration technologies to replace the reinjection of natural gas. This would enhance exports of natural gas, create more flexibility in oil production and provide important global environmental benefits.  In 2013, a joint venture between Masdar and the Abu Dhabi National Oil Company created the Middle East’s first company focused on commercial-scale projects for carbon capture, usage and storage.

Lowering Consumption, Boosting Exports

In 2005, the UAE became one of the first major oil-producing countries to ratify the Kyoto Protocol to the UN Convention on Climate Change. As part of its energy diversification strategy, the UAE is working in a variety of ways to reduce its carbon footprint, meet its own domestic energy needs and expand exports:

  • The Abu Dhabi government committed an initial $15 billion to Masdar, the world’s largest and most comprehensive alternative energy program. US partners include MIT, Columbia University, Colorado-based CH2MHill, Chicago-based Adrian Smith + Gordon Gill Architecture and other institutions worldwide, such as WWF, Imperial College of London and Tokyo Institute of Technology.
  • The UAE is exploring nuclear energy to meet rapidly growing demand for electricity, due to tremendous growth as well as intense water desalination requirements. This reduces domestic demand for natural gas and the need for dirty, oil-burning power plants used to meet peak demand during hot summer months.
  • In the first major cross-border energy deal between Gulf countries, the UAE is importing natural gas by pipeline from Qatar. This pipeline, the Dolphin Project, frees Abu Dhabi’s natural gas supply for crude oil recovery and export. The project began delivering gas to power companies in the summer of 2007 and the UAE receives two billion cubic feet of gas per day.
  • Among other energy efficiency and environmental projects, Dubai has developed region’s most extensive light rail system, to move cars off the road, reduce pollution and ease traffic congestion.

Working with Global Partners

The UAE is the rare country in the region that has a thriving private sector for oil and gas, which includes many partnerships with US companies. The UAE has a history of welcoming private-sector investment into its upstream oil and gas exploration and production sector. Abu Dhabi was the only OPEC member not to nationalize the holdings of foreign investors during the wave of nationalization that swept the global oil and gas industry in the mid-1970s, and it continues to benefit from high levels of private sector investment. Today, international oil companies from the United States, Japan, France, Britain and other countries continue to hold combined equity stakes of between 10 and 100 percent in Abu Dhabi’s vast oil concessions. Occidental Petroleum of the US and Total of France each have a 24.5 percent equity stake in the Dolphin gas pipeline project.

Securing Oil Shipments

The UAE is a responsible partner in protecting global energy supplies. In an effort to enhance supply security, Gulf governments are studying the development of oil pipelines that would bypass the Strait of Hormuz. About two-fifths of the world’s traded oil is currently shipped by tanker through this 34-mile-wide passage. Once built, the pipelines could move as much as 6.5 million barrels of oil per day or about 40 percent of the amount currently shipped through the Strait. One such pipeline, known as the Abu Dhabi Crude Oil Pipeline (ADCOP), links the Habshan oil field in Abu Dhabi with the port of Fujairah and began its first shipment in July 2012. The pipeline allows the UAE to pump about 60 percent of its crude exports to Fujairah Port on the Gulf of Oman, thus avoiding the strategic shipping chokepoint at the Strait of Hormuz. 

A Critical Partner in Regional Security

Maintaining peace and stability in the Arabian Gulf is critical to global energy supplies and markets. The UAE and the US are united in security, and the UAE is a leading coalition partner in the campaign against ISIS. The UAE also cooperates closely with the United Nations, European Union and NATO forces. 

The UAE is dedicated to aggressively challenging extremism in partnership with the US and other coalition countries both on and off the battlefield.  In the campaign against ISIS and other violent extremists, our air forces are functioning as a single force. There are 3,000 American military personnel in the UAE and more US navy ships visit the port of Jebel Ali in Dubai than any other foreign port. UAE and US pilots fly joint missions against a common threat. We have many other joint initiatives that include cutting off funding to ISIS, intelligence sharing and counter-extremism programs to attack the roots of radicalization.

Additional Background

The UAE’s proven oil reserves were 97.8 billion barrels as of 2015. Abu Dhabi holds 92.2 billion barrels, followed by Dubai with 4 billion barrels, Sharjah with 1.5 billion barrels and Ras al Khaimah with 500 million barrels.

Due largely to the great distance that leads to high transportation costs, the United States imports minimal quantities of oil and gas from the UAE. Instead, the UAE exports approximately 62 percent of its crude oil to Japan, making it the UAE’s largest customer. Other Asian economies, which benefit from the same geographic proximity, consume the vast majority of the UAE’s remaining production. 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.