Dubai: The newly discovered oil field off the shore of Dubai will see production begin within a year, a top government officials said Thursday.
"I can confirm that oil has been discovered and expect production to start within a year," Shaikh Ahmad Bin Saeed Al Maktoum, chairman of Dubai's Department of Oil Affairs and its Supreme Council for Energy, told Dow Jones.
Shaikh Ahmed, will head the development of the new marine oilfield that is expected to "provide a new source of income, enhancing the overall development of Dubai," according to a statement from His Highness Shaikh Mohammed Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai.
The timely discovery brings a sentiment lift in the economy of Dubai, which had recently received solid cash injection to manage some of the on-going projects and debts. One of the emirate's major holding companies, Dubai World is currently negotiating for a standstill agreement on loan repayments and to alter terms on about $26 billion (Dh95.47 billion) of debt.
Two Abu Dhabi-owned commercial banks provided a $5 billion loan to Dubai and Central Bank based in Abu Dubai bought $10 billion worth of Dubai bonds that preceded Nakhleel's $4.1 repayment of a maturing bond in December.
"Overall sounds like positive news and timely too, given the dreadful past few months, economically-speaking. A temporary boost for confidence but we must await specific details. Even then, Dubai's growth will be strongly dependent on the non-oil sector, which is likely to take a number of years to recover from the downtown," Mohammad Shakeel, editor and economist at Economist Intelligence Unit told Gulf News.
Dubai's economy that began development on the basis of oil now depends mostly on the non-oil production that represents over 90 per cent.
Dubai's oil reserves, previously expected to run out in 20 years, lie mainly in four offshore fields. The first oil field was discovered in 1966 and the first production was from Fat'h oilfield in 1969. A second oil field, Falah, was discovered in 1972 and production started in 1978. Two other oilfields — Rashid and Margham — were discovered in 1973 and 1982 respectively.
While Dubai Petroleum Company is the main oil operator of these fields, Dubai Natural Gas Company processes the emirate's natural gas.
The city imports natural gas from neighbouring Sharjah to meet the growing population needs, while larger resources of Qatar were tapped recently to power industrial projects. Dubai's government signed a 25-year agreement with Dolphin Energy, a joint venture between UAE and Qatar to import natural gas from the island-country's massive reserves.
Production rise
Meanwhile, the biggest oil producer in the country, Abu Dhabi controls about 90 per cent of total oil output. Crude oil production in the UAE in December rose marginally over the previous month to 2.28 million barrels per day (bpd) according to the latest estimates by the International Energy Agency (IEA), making it the fourth-largest producer after Saudi Arabia, Iran and Iraq in the Organisation of Petroleum Exporting Countries.
The country's compliance with production cuts previously announced by the Opec stood at a high of 98 per cent.
The UAE's crude output in November was 2.27 million bpd. For full year 2009 the UAE's oil output averaged 2.27 million bpd, 12.2 per cent lower than the 2008 average, said the Paris-based IEA, which advises 28 industrialised nations of the world on energy policy.
However, for last year's fourth quarter, the country's oil output average rose marginally to 2.28 million bpd.
