Abu Dhabi pumps Dh50bn into oil

Abu Dhabi has pumped nearly Dh50 billion into its hydrocarbon sector over the past six years within an ongoing programme to boost its crude output capacity and set up oil related projects, official data showed on Saturday.

The investments had steadily increased since 2004 and reached their peak in 2008 before climbing down in 2009 due to the global fiscal crisis, showed the figures by the Abu Dhabi Department of Economic Development (ADDED).

From around Dh6.9 billion in 2004, the total capital pumped into the oil and gas sector, mostly by government-controlled companies, grew to nearly Dh7.2 billion in 2005 and continued its upward trend to hit a record high of about Dh10.5 billion in 2008. In 2009, it dipped to nearly Dh0.2 billion.

Total investments in the sector during 2004-2009 stood at nearly Dh50 billion, making hydrocarbon the largest recipient of domestic capital in the emirate.

“The decline in investment of around 12.3 per cent in 2009 was a result of the global economic crisis as the bulk of the capital in this sector is channeled by public establishments, which were affected by low oil prices,” ADDED said.

The decline in the gross capital formation in the oil sector followed many years of a steady increase as Abu Dhabi has been locked in a drive to expand its crude production capacity, develop its gas sector and set up related projects.

Investments in this sector leaped by nearly 24.7 per cent in 2008 as oil prices soared to an all time high of $147 a barrel in late July that year and global demand was at its peak before both prices and demand collapsed after the eruption of the global crisis in September 2008. Growth in such investments stood at eight per cent in 2007 and around 5.3 per cent in 2006.

The investments in the hydrocarbon sector last year accounted for nearly 11.5 per cent of the total gross capital formation of around Dh79.8 billion, which was higher by about 10 per cent over the 2008 investments of Dh72.6 billion.

Abu Dhabi is the main oil producer in the UAE, which aims to boost its crude output capacity above three million barrels per day in the next few years.

In local press comments last week, ADNOC’s CEO Yousuf bin Omair said there were plans to invest a staggering Dh220 billion in the next 10 years to expand crude output capacity, develop the gas sector and set up associated projects.

He said the crisis, which has forced many companies in the region to shelve projects, has “constituted an incentive for ADNOC” to push ahead with its projects because of the decline in construction costs.

Heavy investments expanded the oil sector’s contribution to the emirate’s GDP from around Dh147.7 billion in 2004 to nearly Dh269.9 billion in 2009.

But the 2009 level was nearly 33.5 per cent below the 2008 contribution of around Dh405.8 billion and the report attributed the sharp decline to a $35 drop in crude prices and a cut of more than 200,000 bpd in Abu Dhabi’s output.

“Last year, the oil sector’s share of the GDP stood at about 49.4 per cent…this means the oil sector is still the driving wheel of economic development in Abu Dhabi…as for oil products, production totaled nearly 17.4 million tonnes in 2009 compared with around 16.2 million tonnes in 2008,” the report said.

Turning to industry, the report showed investment in the sector swelled to a record high of around Dh41.9 billion at the end of 2009 from Dh38.8 billion at the end of 2008. The number of key manufacturing units also increased to 346 last year from 326 in 2008 while the number of workers rose to nearly 55,849 at the end of 2009 from around 49,052 at the end of 2008.

The industrial sector’s contribution to GDP grew by around 11.8 per cent annually to over Dh40 billion in 2009 from 23.3 billion in 2004 and this expanded its share to 7.4 per cent from 5.8 per cent.

“The rise in investment and the sector’s contribution was mainly a result of a large expansion in the petrochemical industry during that period…this expansion has turned Abu Dhabi into one of the largest petrochemical producers.”

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