Only 2.1 per cent of the 2008 GDP for Dubai came from oil output, a dramatic difference from four decades ago when oil brought in half of the emirate’s income. All of this is according to a government bond prospectus and a result of diversification in Dubai.
Dubai’s GDP (gross domestic product) is a calculation to determine the size of the emirate’s economy. It climbed 14 per cent to 302 billion dirhams (or $82.2 billion) in 2008, as reported by the bond prospectus that appeared on the London Stock Exchange early this week. Dubai, a UAE sheikhdom second in size only to the capital Abu Dhabi, recorded 6.37 billion dirhams in oil and natural gas income for 2008, a drop from the 7.57 billion dirhams recorded in 2005.
The GDP for Dubai equaled about one third of the 2008 total GDP for the UAE, as reported in the prospectus that did not include any 2009 estimates. The largest industries in Dubai, including retail and wholesale trade as well as repair and maintenance, totaled around 39 per cent of the emirate’s nominal GDP. Dubai is focusing on expansion into other industries such as financial services, transport and trade, as well as travel and tourism, in the wake of contractions in the real estate market after the worldwide economic crisis.
Dubai is considered the financial hub for the Persian Gulf. In October Dubai put together a program for $2.5 billion in Islamic notes (medium-term) with plans to sell regular bonds valued at $4 billion. This week’s prospectus was issued to supplement the figures released originally in 2009 with the launch of the program for medium-term notes.
The income figures for oil and gas in Dubai are reported net of any expenses for production and fell last year as a result of decreasing international crude prices, as reported by the prospectus. It is expected that oil and gas revenues will fall even further in 2010 as a result of rising capital expenditures. The prospectus did not include data for last year’s earnings.
In New York, oil prices dropped to $62.02 per barrel on average for 2009, down from the 2008 average of $99.74 per barrel, according to Bloomberg data. In 2005 the oil production produced 5 per cent of Dubai’s income. Output for oil should fall between 50,000 and 80,000 barrels per day and total capacity is not revealed by the government.
The expenditures for oil development have rose in Dubai since the 2006 expiry of a concession involving the operation of offshore deposits. The government has since taken control there. Over the past year, due to the discovery of Al Jalila field and work taking place at the offshore deposit, capital spending has again increased. The prospectus reported that potential for production at Al Jalila is not yet available.
Dubai wholly owns Emirates National Oil Co., a refiner and fuel retail firm market valued at 8.65 billion dirhams, as reported in the prospectus. Also, Dubai Aluminum Co., a metal producing company, is wholly owned by the state and has a value of 16 billion dirhams.