MEED Analyst John Bambridge says that the UAE has demonstrated remarkable economic resilience in recent years, with its non-oil sector bouncing back from Covid-19 and emerging as the real driving force behind the country’s growth.
Byline John Bambridge
Despite slower oil activity due to the Opec+ oil production cuts and regional turmoil, the non-oil sector has continued to go from strength to strength and is enjoying a resurgent boom in its real estate sector, with levels of activity not seen since before the 2008 global financial crash.
Among the other drivers of UAE non-oil growth are the country’s rapid expansion and rollout of free trade agreements, with it having signed comprehensive economic partnership deals with 12 countries to date. In the absence of much progress on GCC-wide trade agreements, Abu Dhabi is opening itself up to greater trade opportunities with other markets.
Another significant recent development was the UAE’s removal from the Financial Action Task Force’s ‘grey list’ in 2024, which has bolstered investor confidence and general business sentiment.
On the projects side, there is a real estate and construction boom, with over USD 475 billion of private real estate developments and public building and housing programmes planned or under way. Transport schemes at the top of the agenda include the UAE-Oman rail scheme and a high-speed rail link connecting Abu Dhabi and Dubai.
Also in the works is the USD 22 billion Dubai Strategic Sewerage Tunnel project. Such a network would have served the city well in mid-April, when its infrastructure fared poorly against the hardest rainfall in 75 years.
On the oil side of the economy, Abu Dhabi National Oil Company (Adnoc) remains committed to expanding its upstream operations and is expected to maintain robust spending on key projects in 2024. Close to USD 8 billion of combined midstream, downstream and petrochemicals contracts are also expected to be awarded this year.
As a result of comprehensive interpretations of legacy geological data and new, advanced seismic surveys, regional NOCs were able to announce discoveries of considerable unconventional resources in 2020.
The year also saw state energy players present noteworthy capital expenditure budgets towards the economic recovery of resources, particularly the production of gas, from existing and new tight and shale plays.
Saudi Arabia’s programme has witnessed start-stop periods over decades, during which state energy giant Saudi Aramco had been working to determine the extent and economic potential of reserves available. The kingdom’s campaign was flagged off in 2014, with Aramco awarding UK-based Wood Group a project management services deal, which was extended for two years in January 2020.
There are three areas Aramco has earmarked for commercial development: Turaif in the Northern Borders province and the giant Jafurah basin and South Ghawar, both of which are located in the Eastern Province.
In 2017, the first unconventional gas development project took shape in the north – extracting tight gas from the Turaif deposit to feed a new power station at the nearby Waad al-Shamal industrial city, and thereby solving the problem of the latter lacking a connection to Aramco’s cross-country Master Gas System distribution network.
