United Arab Emirates (UAE) Business: The Oil Industry
United Arab Emirates (UAE) Business: The Oil Industry Last updated on Monday 26th April 2010
First exported in 1962, petroleum dominates the economy of the UAE. At one time an underdeveloped area, by 1985 the region had the highest per capita income in the world -- $19,120.
The immense wealth has been invested in capital improvements and social services in all seven of the emirates. Petroleum production is centred in Abu Dhabi and Dubai. Industrial development is essentially petroleum related and is limited by a lack of trained personnel and raw materials. The desert supports limited irrigation for agriculture; in addition, fishing, sheep herding and poultry provide domestic food sources. The UAE enjoys a large trade surplus because of its petroleum exports.
The seven constituent parts of the UAE are Abu Dhabi, the largest and richest in terms of oil, Dubai, the commercial centre, Sharjah, Ras al-Khaimah, Fujairah, Umm al Qawain and Ajman. The main cities and towns of each emirate are all on the southern shores of the Arabian Gulf except for Fujairah, which is a coastal strip on the Gulf of Oman outside the Strait of Hormuz.
Abu Dhabi is the only one of the seven emirates to qualify as an oil state in the same sense as Kuwait or Qatar. Like those two, Abu Dhabi has diversified into petrochemicals and other oil-related industries. Dubai is the second-richest emirate. Its oil income is now about one quarter of Abu Dhabi's; however in the years before Abu Dhabi became rich; Dubai supported itself as the main trading and smuggling port in the region. In addition to being one of the main business centres of the Gulf today, it also has a huge dry-dock complex, one of the Middle East's busiest airports and a large free trade zone at Jebel Ali.
Sharjah receives a modest income from oil and it also has a very busy airport, Dubai's nearness notwithstanding. It is the main entry point for tourists visiting the UAE. Sharjah's airport and its seaport derive considerable income from cargo.
The most northern of the emirates, Ras al-Khaimah, is also dependent upon its oil income. It has also invested heavily in tourism. Fujairah, the only one of the seven emirates without a coastline on the Gulf, is also seeking tourists but it remains primarily a cargo port. Fujairah, Umm al-Qawain and Ajman all receive substantial subsidies from the federal government.