Dubai finds new off-shore oil field

New off-shore oil field discovered in Dubai expected to further help emirate to overcome debt.

DUBAI - The government of Dubai announced Thursday the discovery of a new off-shore oil field.

The ruler of Dubai, Mohammed bin Rashed al-Maktoum, "heralds the good news to the people of the United Arab Emirates that a new off-shore oil field has been discovered in Dubai," a government statement said.

The UAE sits on the world's fifth largest proven oil reserves, amounting to 97.8 billion barrels of crude oil. But 95 percent of those reserves are controlled by the leading partner in the federation, Abu Dhabi.

The UAE also has 214.4 trillion cubic feet (six trillion cubic meters) of gas reserves, ranking it sixth in the world after Russia, Iran, Qatar, Saudi Arabia and the United States.

Dubai's poor oil reserves, mostly off-shore, are expected to be exhausted within 20 years, while it controls only two percent of the country's gas wealth, according to UAE government website.

Dubai's economy had boomed over the past years on non-oil sectors, particularly real estate and construction, which attracted huge investments, in addition to its prospering tourism.

But its rapid economic growth came to a halt after the global financial crisis hit Dubai in autumn 2008, drying out foreign financing that was vital for the overheated real estate sector.

Dubai had heavily borrowed its way to build its economy, splashing on grandiose projects, mainly man-made tree-shaped islands. It is now facing severe problems in meeting its debt obligations.

The emirate sent jitters throughout world global markets in November when it said it needed to freeze payments on the debt of its largest state-corporate, Dubai World.

The group is now negotiating the restructuring of some 22 billion dollars in debts owed by its troubled subsidiaries.

Dubai's total debt is estimated between 80 and 100 billion dollars, although some reports say it could be as high as 170 billion dollars.

But the emirate has so far leaned on its rich neighbor Abu Dhabi, which together with the central bank, has extended aid worth 20 billion dollars in 2009, to bail out Dubai's troubled companies.

Source: Middle East Online.
Link: http://www.middle-east-online.com/english/?id=37023.