Domestic consumption on the rise
Electricity demand in the UAE and the wider Middle East is also set to grow at one of the highest rates in the world, or 2.5% each year, just behind Africa's 2.6% over the next twenty years."Oil use for power generation [is set to fall] at the slowest pace in the Middle East, where subsidies persist and electricity demand grows strongly," said the International Energy Agency in a long-term forecast. In 2035, the Middle East is expected to account for almost half of world oil-fired generation, up from 29% in 2010, the IEA said.The US Department of Energy notes that the UAE's domestic petroleum consumption -- including refined products -- was 487,000 barrels per day in 2011."Gasoline is heavily subsidized in the country, and while the subsidies are politically popular, some analysts believe they encourage wasteful practices," the department noted. "Over the past 10 years, the annual growth rate of oil consumption was 4.3%, and positive economic growth forecasts indicate this trend is likely to continue."
At the same time, the UAE's production capacity is flat-lining after growing steadily over the past few years."In the UAE we estimate capacity will increase marginally from current levels of 2.8 million b/d supported by successful enhanced oil recovery efforts, particularly with water and gas injection at mature onshore fields," said Sabine Schels, analyst at Bank of America Merrill Lynch, in a forecast looking till 2017."Volumes should come from the re-commissioning of mothballed facilities at Lower Zakum, expansions at Upper Zakum, and the start-up of a handful of new smaller fields both onshore and offshore."The government has delayed plans to raise oil capacity to 3.5 million bpd to 2018, due to weaker global oil-demand prospects.
Diversifying energy sources
For a country that sits on the seventh largest conventional gas reserves in the world, the UAE finds itself in a strange situation where Abu Dhabi exports gas while Dubai imports it.
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