UAE petrol prices are third highest in Arab world

The UAE has the fourth largest hydrocarbon deposits and the fourth highest refining production in the Arab region.

Theoretically such a massive wealth means gasoline prices should be among the lowest in the Arab world but practically they are the third highest.

The UAE comes only after Syria and Tunisia in terms of high petrol prices and is way behind other Gulf oil heavyweights, where petrol prices are among the cheapest in the world. Petrol prices in Egypt are even far below those in the emirates although the UAE’s oil wealth is more than 20 times bigger.

At the start of 2011, the price of regular litre of petrol stood at Dh1.5 and that of premium petrol at 1.76, according to official data.

Regular petrol price in Syria stood at Dh3.15 while in Tunisia it was around Dh2.56. Gasoline prices in the remaining Arab nations were below those of the UAE, the second largest Arab economy after Saudi Arabia.

Petrol in Egypt, which controls only around 4.5 billion barrels of proven crude wealth, was sold at Dh0.58 while it was sold in conflict-battered Iraq at nearly Dh1.39 at the start of 2011, showed the figures by the Kuwaiti-based Organization of Arab Petroleum Exporting Countries (OAPEC).

In Libya, petrol prices stood at as low as Dh0.51 per litre while petrol was sold at about Dh1.1 in Algeria, the report showed.

In the UAE’s Gulf neighbours, gasoline is as affordable as less than half the price in the emirates. It stood at as low as Dh0.44 per regular litre in Saudi Arabia, around Dh0.69 in Qatar and Dh0.7 in Kuwait.

Even Bahrain, which is not an oil exporter given its limited hydrocarbon wealth, offers cheaper fuel than the UAE, with its petrol prices standing at Dh0.77.

The UAE had relatively low petrol prices before a series of price hikes over the past three years. Officials argue that prices are not too high compared with those in the west as they are still heavily subsidized.

Analysts explain that UAE petrol prices are higher than those in other Gulf Cooperation Council (GCC) states because some suppliers in the country import gasoline from other countries, which follow market prices.

“The UAE is different from Saudi Arabia or Qatar…those two countries do not import petrol from abroad and their gasoline sector is heavily subsidized,” one expert said. “In the UAE, some suppliers, mainly in Dubai, import gasoline from abroad given the relatively low refining output in the northern emirates.”

At the start of 2011, the UAE has the fourth largest refining capacity in the Arab world after Saudi Arabia, Kuwait and Iraq, with output standing at 798,000 bpd. But most of the production is based in Abu Dhabi although there are plans to set up new refining units in the northern emirates.

The country’s gasoline production is also the sixth largest in the region after Saudi Arabia, Iraq, Kuwait, Egypt and Algeria, standing at 48,000 bpd. Gasoline consumption stood at 92,000 bpd, which means the UAE has to import nearly 44,000 bpd to fully meet domestic demand.

In a recent study, a London-based energy centre said the UAE has the lowest subsidies on fuel prices among oil producers.

The Centre for Global Energy Studies, which is owned by former Saudi oil minister Sheikh Ahmed Zaki al Yamani, said the UAE did not have any subsidy on diesel prices five years ago, while it provided a subsidy of $10 per barrel of gasoline. Subsequently, Abu Dhabi has subsidized diesel.

At a debate on fuel prices last week, some members of the Federal National Council (FNC), the UAE’s appointed parliament, called for cutting gasoline price to bring them in line with that in the remaining GCC members.

Analysts believe such a move will take time as measures are needed to tackle the output shortage in northern emirates to slash imports, adding that this requires a federal cabinet decision and could involve more subsidies.

In a study last year, the Abu Dhabi Department of Economic Development (DED) said high petrol prices are among key obstacles for investment flow into the UAE and called on authorities to tackle this problem.

“There are several factors and facts that make the potential investment climate in Abu Dhabi and the UAE in general very attractive…these include the country’s strategic location, its advanced infrastructure, the presence of major international establishments in the UAE, the mushrooming of free zones, low income taxes, financial surpluses, and abundant energy resources,” it said.

“On the other hand, there are 14 barriers to investment flow into Abu Dhabi and the whole UAE…on top of them are the surge in the prices of petrol and other fuel, the national sponsorship terms, and lack of property and land.”

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