As the global oil price slump takes its toll on Gulf countries, the UAE is boosting its non-oil sectors, now seeking to lure in more than US$70 billion in industrial investment by 2025, according to UAE officials.
These investments would increase the industrial sector share of GDP to 25 percent, and further reduce the blow of low oil prices.
The announcement comes shortly after the UAE energy minister called on investors globally to stand firm and refrain from withdrawing from projects as some US$200 billion in oil and gas projects has already been postponed globally.
Speaking at the 19th Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) in Dubai last week, UAE Energy Minister Suhail Al Mazrouei said that long term, oil demand outstrips supply, and companies who enjoy strong balance sheets should not be deprived of investment.
"The dramatic reaction in reducing investment will inevitably lead to demand coming back into equilibrium, and ultimately exceeding supply in the coming years," the Minister said.
Al Mazrouei pointed to the "cyclical nature" of the industry, noting that demand has consistently increase and "the business cycle that drives an increase in demand moves much more quickly than the oil industry can expand its capacity for supply."
The bottom line, according to Al Mazrouei, is that this is a "golden opportunity" for companies that are strong enough to "hold their nerve and make strategic long-term investments."
"With the industry needing between six and nine years to move from discovery of new deposits through to production, the dramatic fall in investment would leave companies making those cuts slow to respond when the market starts to rise," he said.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More