Gulf Kannadiga - a reflection of Karnataka in the Gulf

5 February 2010: The Govt of Dubai announced the discovery of a new offshore oilfield in the Arabian Gulf and said the find, the first in nearly two decades, will boost the emirate’s economy.

The announcement was made by His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, at a gathering of shaikhs, ministers and other dignitaries just before a Cabinet meeting, news agency Wam reported.

The agency said Shaikh Mohammed had assigned to Shaikh Ahmed bin Saeed Al Maktoum, Chairman of the Oil Affairs Department, the task of evaluating the size of the field, located east of the existing Rashid field, and production potential.

“The discovery will (strengthen) the economic capacities of the state (and increase) UAE’s oil production,” Shaikh Mohammed said. “It will give a strong impetus to all sectors of the local economy and provide a new source of income, enhancing the comprehensive development of Dubai.”

Analysts said the discovery, if proven to contain commercial quantities, could provide a welcome boost for Dubai.

“Discovery of oil in Dubai is overall a positive development and will contribute to confidence building measures,” said Dr Samir Pradhan of the Gulf Research Centre. “But it remains to be known what the nature of reserve is, how big the stock is, how deep it is, what the technologies required are and above all the cost of production.”

Pradhan said the new discovery could be deep down, which in turn implies that more advanced technologies and investments will be required to extract oil from it.

The emirate’s existing oil production comes primarily from four offshore fields: Fateh and Southwest Fateh, and the smaller Rashid and Falah. An onshore field, Margham, mainly produces natural gas and condensate.

The emirate pumps only a fraction of supply from the UAE, the world’s third largest oil exporter with an output of around 2.3 million barrels per day (bpd). The emirate of Abu Dhabi produces most of the UAE’s oil and holds over 90 per cent of its reserves.

Oil output from Dubai’s mature fields is in decline, and is placed at around 50,000 to 70,000 bpd, according to industry estimates. Dubai does not provide official oil production data. Output peaked in 1991 at over 400,000 bpd.

Income from crude and natural gas contributed only 5.3 per cent, or Dh7.5 billion ($2 billion), to Dubai’s gross domestic product in 2005, according to the latest available data on the Dubai Chamber of Commerce and Industry website.

Oil was first discovered in Dubai in 1966 and production started in 1970, according to UK-listed Petrofac Ltd., which manages the emirate’s offshore oil and gas assets – four fields with 70 platforms and 600 wells. Production rates peaked in the late 1980s, but have since fallen. The last discovery was made in 1991, according to industry experts.