By Anthony DiPaola
Gov't bond prospectus shows oil's contribution to economy half what it was in 1970s.
Dubai’s oil output made up 2.1 percent of the Persian Gulf emirate’s economy in 2008, slipping from about half its income in the 1970s, as the sheikhdom diversified revenue, a government bond prospectus showed.
The emirate’s gross domestic product, a measure of the size of an economy, rose 14 percent in 2008 to 302 billion dirhams ($82.2 billion), according to the bond prospectus posted on the London Stock Exchange website on Monday. Dubai, the second- largest sheikhdom in the United Arab Emirates behind capital Abu Dhabi, earned 6.37 billion dirhams from oil and natural gas production in 2008, a decline from 7.57 billion dirhams in 2005.
Dubai’s GDP accounted for about a third of the UAE’s total in 2008, according to the prospectus, which didn’t give estimates for 2009 income. Wholesale and retail trade and repair and maintenance were Dubai’s largest industries, accounting for 39 percent of nominal GDP. Dubai is seeking to expand in travel and tourism, financial services, transport and trade after the global financial crisis hobbled its real estate industry.
The Persian Gulf’s financial hub in October set up a $2.5 billion Islamic medium-term note program and a $4 billion plan to sell regular bonds. The emirate on Monday released the prospectus as a supplement to the original data sheets on the $4 billion medium-term note program published last year.
Dubai’s income from oil and gas, which is net of production expenses, slipped in 2009 due to lower international crude prices, according to the prospectus. Oil and gas earnings will decline further in 2010 due to higher capital expenditure, the prospectus said without providing a figure for 2009 earnings.
Oil in New York slipped to an average price of $62.02 a barrel in 2009, from an average of $99.74 in 2008, Bloomberg data show. Dubai’s oil production made up 5 percent of its income in 2005. Oil output may be between 50,000 and 80,000 barrels a day and the government doesn’t reveal its capacity.
Dubai increased oil development expenditure after a concession to operate its offshore deposits expired in 2006 and the government took over production. Capital spending rose in the last year with the discovery of and work on the offshore Al Jalila field. There is no estimate available for potential production capacity at Al Jalila, according to the prospectus.
Emirates National Oil Co., the state’s wholly owned refiner and fuel retailer, has a market value of 8.65 billion dirhams, according to the prospectus. Dubai Aluminium Co., the wholly owned metals producer, was valued at 16 billion dirhams. (Bloomberg)For all the latest UAE news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.