How to calculate the cost of developing a major oil field in Dubai
Dubai: Canola oil and gas is the second-largest oil-producing sector in the UAE, after coal, and it is growing fast.
But the cost to develop a major field in the city is much higher than in other parts of the Middle East, due to a lack of infrastructure and the lack of capital investment.
According to the Energy Investment and Development Association (EIDA), the costs of development of the major oil fields in the Emirates have risen by more than a factor of two in the last two years.
“The cost of the oil industry is more than twice as high as it was two years ago, and the cost has escalated to more than ten times the cost in Dubai,” said Naeem Khosravi, a researcher at EIDA.
“It is an industry that has been struggling to find its footing.
The UAE has one of the world’s largest reserves of oil and a strong domestic demand, but has struggled to invest in infrastructure and capital.”
According to EIDa, Dubai’s oil industry has been hit hard by a series of natural disasters in the past two years, including the 2011 earthquakes and a massive spill in the Abu Dhabi harbour that killed over 500 people.
The recent flooding, which has left many residents without electricity, has made it even harder for companies to get their pipelines up and running.
“This has put a strain on our infrastructure,” said Khoslevi.
“For the past couple of years, we have been seeing a lot of closures.
We had to close down the main port in Dubai for three weeks last year.”
EIDB, a private research and consulting group based in Dubai, has compiled a list of the costliest oil fields and pipelines in the Middle Eastern region.
The study estimates that it will take at least 20 years to develop the entire Abu Dhabi oilfield.
The cost of oil is estimated at around $6.5 billion.
“In the past decade, the costs have risen, which is why oil is the most expensive energy in the world,” said Shadia Jaffari, an energy economist at EMDI.
“There are some countries that have developed their own oil fields but we still have to develop our own pipelines, and infrastructure, so that is why it is so expensive.”
The cost to construct a pipeline can range from $1 billion to $5 billion, and some of the biggest projects in the region are worth more than $30 billion.
The report also highlights a shortage of skilled workers.
“We have the largest shortage of qualified professionals in the industry, and they are underpaid,” said Jaffar.
“They are not paid in a timely manner, they are not allowed to retire, and their salaries are often lower than those in other sectors.”
Jaffaris analysis also found that oil-rich regions in the Gulf and North Africa have also been hit by the global economic downturn.
“Many of these countries have had a tough time, especially the Gulf countries,” said Omid Zaki, a research analyst at EADI.
The region is still reeling from the global financial crisis, and a number of oil-dependent countries have also seen significant growth in production, according to EMD.
But in the short term, these countries are also struggling to recover from the economic downturn, which saw them experience a decline in oil prices.
According the EID report, a majority of the Gulf oilfields were built between 2005 and 2013, but the number of wells per field has decreased in recent years.
The EID data also indicates that the UAE’s oil production will increase in the next five years, but at a much slower pace than its oil production in the United Arab Emirates.
EID is also calling for an investment in energy infrastructure and infrastructure projects, especially in the construction sector.
“Investments in infrastructure are the biggest challenge facing the UAE,” said Zaki.
“Even though there are huge investments in oil and other industries, there is no infrastructure to support it, which makes the industry more vulnerable to collapse.”