Strategic Position
The oil and gas sector remains the foundational pillar of the UAE economy. While its share of GDP has declined from over 60 percent in the early 2000s to approximately 30 percent today, this reflects the success of diversification rather than any contraction of the hydrocarbon base itself. The sector continues to generate the fiscal surpluses, sovereign wealth capital, and foreign exchange reserves that underwrite the federation’s broader economic ambitions. Without hydrocarbons, the UAE’s diversification story — from tourism to technology to financial services — would lack its primary funding mechanism.
Abu Dhabi holds roughly 96 percent of the federation’s proven crude oil reserves, estimated at 98 billion barrels, placing the UAE sixth globally. Natural gas reserves stand at approximately 290 trillion cubic feet. Dubai, Sharjah, and Ras Al Khaimah maintain modest production, but Abu Dhabi’s dominance is structural and absolute.
ADNOC: The National Champion
The Abu Dhabi National Oil Company is the engine of the sector and one of the largest integrated energy companies in the world. ADNOC operates across the full hydrocarbon value chain — from exploration and production to refining, petrochemicals, distribution, and trading. Under the leadership structure established over the past decade, ADNOC has undergone a transformation from a traditional national oil company into a commercially driven, publicly listed conglomerate with global ambitions.
ADNOC’s investment plan exceeds $150 billion through the end of the decade, directed at expanding upstream capacity, integrating downstream operations, accelerating the energy transition, and building a world-class chemicals business. Current production capacity stands at approximately 3.2 million barrels per day, with a stated target of reaching 5 million barrels per day by 2027. This expansion is being achieved through a combination of enhanced oil recovery techniques, new field development (including the Hail and Ghasha sour gas mega-project), and strategic partnerships with international oil companies.
The company has also pursued a series of landmark capital market transactions. ADNOC Distribution, ADNOC Drilling, ADNOC Logistics & Services, ADNOC Gas, and Borouge (the petrochemicals joint venture with Borealis) have all been taken public on the Abu Dhabi Securities Exchange, raising billions and introducing commercial discipline across the group.
Murban Crude and Market Influence
The launch of the IFAD Murban Futures Contract on the Intercontinental Exchange (ICE) Futures Abu Dhabi in 2021 marked a structural shift in how the UAE’s benchmark crude is priced and traded. Murban — a light, sweet crude — is now traded as a forward contract with a transparent pricing mechanism, replacing the previous retroactive official selling price system. This positions Abu Dhabi as a price-setting hub for Asian crude markets and enhances the UAE’s influence within global oil trading infrastructure.
The move to a futures-based benchmark aligns with the UAE’s broader ambition to develop Abu Dhabi and Dubai as global commodities trading centres, complementing existing strengths in precious metals, agricultural commodities, and energy derivatives.
Downstream Expansion and Ruwais
The Ruwais Industrial Complex, located in the Al Dhafra region of Abu Dhabi, is one of the largest integrated refining and petrochemical facilities in the world. ADNOC’s Ruwais refinery processes over 900,000 barrels per day, and the adjacent Borouge facility is one of the world’s largest polyolefin production sites. The ongoing TA’ZIZ industrial chemicals zone within Ruwais is designed to attract global chemicals manufacturers and create a downstream ecosystem that converts crude oil into higher-value products.
This downstream integration strategy is central to ADNOC’s objective of capturing more value per barrel. Rather than exporting raw crude, the company is investing in cracking, conversion, and specialty chemicals capacity that serves growing demand in Asia, Africa, and the domestic market. The Borouge 4 expansion, expected to be one of the largest single-site polyolefin complexes globally, will significantly increase the UAE’s petrochemical output.
LNG and Gas Monetisation
Natural gas has emerged as a critical growth area for the UAE oil and gas sector. ADNOC Gas, the dedicated midstream and downstream gas entity, is expanding LNG production capacity through the Ruwais LNG project — a two-train facility expected to produce approximately 9.6 million tonnes per annum. This represents the UAE’s largest LNG investment and positions the country as a significant exporter in a global market where demand for lower-carbon fossil fuels is increasing.
The Hail and Ghasha sour gas development in the offshore Al Dhafra concession is designed to unlock vast unconventional gas reserves, reducing the UAE’s historical reliance on gas imports (the country has paradoxically been a net gas importer despite substantial reserves) and providing feedstock for industrial growth and power generation.
Hydrogen Pivot and Energy Transition
ADNOC is positioning itself at the centre of the UAE’s hydrogen ambitions. The company is investing in both blue hydrogen (produced from natural gas with carbon capture and storage) and green hydrogen (produced via electrolysis powered by renewable energy). ADNOC’s carbon capture programme, which currently captures approximately 800,000 tonnes of CO2 annually, is being expanded to support blue hydrogen production at scale.
The hydrogen strategy connects directly to the UAE’s Net Zero 2050 target and the COP28 legacy commitments. ADNOC has signed offtake and cooperation agreements with energy companies and governments in Europe, Japan, and South Korea, establishing early-stage export corridors for hydrogen and its derivatives, including ammonia.
Fiscal Role and We the UAE 2031
The oil and gas sector’s contribution to the federal budget and Abu Dhabi’s fiscal position cannot be overstated. Hydrocarbon revenues fund a significant share of government spending, sovereign wealth fund allocations (ADIA, Mubadala, ADQ), and infrastructure investment across the federation. The We the UAE 2031 vision explicitly acknowledges the sector’s transitional role: hydrocarbons provide the capital base for economic diversification while the sector itself evolves toward lower-carbon production, petrochemical integration, and new energy exports.
The strategic calculus is clear. The UAE intends to be among the last and most efficient producers of oil and gas in a decarbonising world, while simultaneously building the infrastructure to compete in hydrogen, chemicals, and advanced materials. The oil and gas sector is not being wound down — it is being reengineered.