Oil in Abu Dhabi: A Brief History of the Industry

7116609463_c6516a2733_k

Abu Dhabi, capital of the United Arab Emirates (UAE), holds 94 percent of the country’s oil reserves, and about 9 percent of the entire world’s. The populous region’s oil industry has transformed the city it from a poor fishing town into one of the richest cities on the planet.

The industry began to show glimmers of promise after the decline of the city’s pearl trade, when an agreement to start exploration for oil was made in 1936. The Petroleum Development (Trucial Coast) signed this agreement with the ruler at the time, Sheikh Shakhbut.

204899838_21277ef78d_b

In 1939, a seventy-five-year concession was signed with a number of foreign oil companies (FOCs), but things were far from smooth sailing: WWII stalled the operation for years, and local communities suffered from economic hardships, malnutrition and disease.

Gravity surveys finally began in 1946, but stalled in 1950 when the region’s desert terrain and sand dunes proved too much for exploration vehicles. Then, a drilling attempt of Ras Sadr turned up dry, and more drilling off the seismic coast had to be plugged and abandoned.

It wasn’t until 1958 (on the Umm Shaif field) and 1959 (Merban No. 3, later named Bab) that drillers struck commercially viable oil. Oil production and exports started in 1962 and 1963; after 1966 the city amassed enough wealth to transform the region and support the formation of the UAE in 1971.

In 1971, the state-controlled Abu Dhabi National Oil Company (ADNOC) was formed, strategically aligned with Western oil companies like Exxon, Shell and BP. Two oil refineries opened by ADNOC in the early 1979 and 1981, making the UAE entirely self-sufficient in petroleum production.

16044160715_d0cafc21f4_k

Western alliances helped bring Abu Dhabi the best technology for decades more of momentous discoveries. The original concession ended in 2014, so ADNOC is currently allowing the original foreign oil companies it partnered with to continue working before all FOC bids are evaluated and new agreements are reached.

Though the heyday of oil discovery may be over for the time being, expansion continues. Today Abu Dhabi has the sixth largest proven oil reserves (92 million barrels), and remains the eighth biggest oil producer in the world, with an output roughly 3 million barrels per day.