Domestic market overview


What is the extent of oil and gas production in your jurisdiction?

Approximately 33% of the United Arab Emirates’ gross domestic product is derived from oil and gas production. Based on 2017 estimates, the United Arab Emirates ranks seventh globally in terms of its oil and gas reserves and holds approximately 97.8 billion barrels of proven oil reserves (approximately 6% of the world’s oil reserves).

In 2017 UAE crude oil production was approximately 2.67 million barrels per day (mb/d) and natural gas production was approximately 54.09 million cubic feet per day (mcf/d).

Of the country’s seven emirates, Abu Dhabi, the capital, dominates the production of both oil and gas, holding approximately 96% and 94% of the country’s reserves, respectively.

Crude oil productionCrude oil production in the United Arab Emirates increased steadily between 2013 and 2016 – from 2.8 mb/d in 2013 to 3.1 mb/d in 2016 (an annual growth rate of 2.5%), followed by a dip to 2.67 mb/d in 2017 as a result of the Organisation of the Petroleum Exporting Countries (OPEC) limiting production that year. An increase has been observed in the second half of 2018, with crude oil production averaging:

  • 2.97 mb/d in August 2018;
  • 3.05 mb/d in September 2018; and
  • 3.27 mb/d in October 2018.

Further, Abu Dhabi National Oil Company (ADNOC), the United Arab Emirates’ leading oil producer, has recently announced plans to increase its oil production capacity to 4 mb/d by 2020.

The United Arab Emirates has been a member of OPEC since joining in 1967, which can affect production levels because OPEC aims to coordinate the petroleum policies of its members by setting production targets to stabilise the global oil market at preferred pricing levels. In OPEC’s monthly report published on 13 November 2018, OPEC anticipated that the increase in global oil demand in 2019 would decline in comparison to previous estimates, while supply would increase faster than estimates. As a result, at the Joint Ministerial Monitoring Committee meeting held on 6 December 2018, OPEC members agreed to reduce their production targets by 0.8 mb/d for the first six months of 2019, which is expected to affect UAE production during that period.

Natural gas productionUAE natural gas production increased in 2017, continuing a trend of steady growth in recent years. In November 2018, French energy company Total announced that it had been awarded 40% of the Ruwais Diyab unconventional gas concession from Abu Dhabi, becoming the first international company to participate in an unconventional gas exploration programme in Abu Dhabi.


How does domestic energy consumption break down with respect to oil and gas, as well as imports and exports?

The United Arab Emirates has among the highest per capital energy consumption in the world. The majority of the United Arab Emirates’ domestic energy demand is met by natural gas (approximately 61%), with the remainder met almost exclusively by crude oil. In 2017 the total energy consumption within the United Arab Emirates was 108.7 million tons of oil equivalent, including 45 tons of crude oil and 62.1 tons of natural gas.

Net exporter of oilThe United Arab Emirates is a significant net exporter of oil. Its domestic consumption requirements are met almost entirely through local production.

Net importer of natural gasUAE domestic natural gas consumption exceeds domestic production, and the United Arab Emirates is a net importer of natural gas (primarily from Qatar, via the Dolphin pipeline). It imported 12.11 barrels of oil equivalent per day of gas in 2017. Moreover, the majority of the gas produced in the United Arab Emirates is high in sulphur, making its development and processing expensive. As such, 30% of the gas is re-injected into oil fields to fuel enhanced oil recovery techniques, extending the life of mature oil fields.

As a result of the ongoing diplomatic and economic distancing between Qatar and the United Arab Emirates and other Gulf Cooperation Council states, the United Arab Emirates is currently working towards reducing its dependency on Qatari gas. Recently, ADNOC announced the discovery of new gas fields and its intention to implement a strategy to position the United Arab Emirates as a net exporter of natural gas. Notably, in November 2018, ADNOC announced new gas production partnerships with:

  • Total, awarding the French company a 40% concession in the Ruwais Diyab unconventional gas concession; and
  • Eni, granting the Italian company a 25% stake in an offshore ultra-sour gas project.

The United Arab Emirates is also trying to stimulate domestic investment by creating conditions for a re-invigorated gas industry, including significantly increased production of feedstock for petrochemical industries.

Increased focus on renewable energyWhile the United Arab Emirates is investing in renewable energy in order to diversify its energy mix, renewables are not currently anticipated to have a significant impact on baseload power supply in the short to medium term.


What are the current trends and future prospects for oil and gas supply and demand in your jurisdiction, and what policies has the government adopted to address these?

The dominant trend within the UAE oil and gas sector is the focus on increasing production capacity and supply, particularly in the downstream sector, as the global demand for petrochemical products increases. In May 2018 ADNOC unveiled a strategy to implement a $45 billion expansion of the Ruwais Complex, an industrial city on Abu Dhabi’s western coastline, where it aims to create the largest integrated refinery and petrochemicals complex in the world.

Another prominent current trend in the United Arab Emirates is the focus on hydrocarbon exploration. In Abu Dhabi, ADNOC is looking for untapped resources and is currently offering new oil and gas blocks for competitive bidding. In 2018 ADNOC split its offshore concessions into three blocks and awarded 40-year concessions to various international companies. Notably, in November 2018, Total announced it was awarded 40% of the Ruwais Diyab unconventional gas concession from Abu Dhabi. The French company will be the first international company to participate, in partnership with ADNOC, in an unconventional gas exploration programme in Abu Dhabi. Similar concessions have been awarded to companies such as Italy’s Eni, Japan’s INPEX and Spain’s Cespa (which is owned by Mubadala, an Abu Dhabi sovereign wealth fund). At present, the majority of oil fields in Abu Dhabi are mature fields, but ADNOC recently announced that it will be developing new oil and gas fields within three onshore and offshore locations. Examples of such fields include the Haliba Field, the Dhafra-Mushah and Ghurab onshore field and the Bu Dana and Mandous offshore fields.

Aiming to be self-sufficient in gas production by 2040, in November 2018 the Supreme Petroleum Council of Abu Dhabi approved a plan to invest $132 billion to increase the emirate’s oil and gas production capacity. Concrete steps are being taken in this regard: ADNOC is currently tendering Phase II of an integrated gas development expansion project which will add 245 mcf/d of gas production, taking advantage of increased transportation capacity generated through Phase I of the project.

Other notable trendsThe UAE government is seeking to support economic growth through development and diversification of non-hydrocarbon industries. To that effect, Dubai has adopted the Strategic Plan 2015 and the Dubai Plan 2021, two significant development programmes that envisage, among other things, an increase of foreign direct investment as a proportion of the emirate's gross domestic product.

In Abu Dhabi ADNOC is implementing a 2030 strategy based around three main objectives. First, ADNOC is seeking a more profitable upstream through:

  • the increase of production capacity to 3.5 mb/d in 2018;
  • the continued development of enhanced oil recovery; and
  • the creation of partnerships that will give ADNOC access to expertise, capital, technology and new markets.

Second, there is a drive towards more value-intensive downstream production through:

  • the increase of gasoline production to 10.2 million tonnes per year (mt/a) by 2022;
  • the growth of petrochemical production to 11.4 mt/a in 2025; and
  • the expansion of innovative plastics solutions.

Third, ADNOC is creating a more sustainable and economically robust gas supply through:

  • maximising the value and ensuring the security of domestic natural gas production and supply;
  • the expansion of processing capacity by 50%;
  • the development of the Hail, Ghasha, Delma, Nasr and Shuwaihat fields (which stand to produce 1.2 billion standard cubic feet of gas per day); and
  • increases in operational efficiency.

The downward surge in the price of oil globally has put the budgets of many oil-producing economies under pressure. The UAE government has responded by supporting a policy of mergers between petroleum companies as a means of cost control and efficiency, as well as monetisation of certain assets. In early 2018 Mubadala, one of Abu Dhabi’s sovereign wealth funds, announced that it would be launching an initial public offering for 10% of its stake in the Emirates Global Aluminium, which thus far had been wholly state owned. This move reflects a similar privatisation strategy followed by ADNOC. In November 2017 the company launched a $3 billion bond issue and in December 2017 listed 10% of its subsidiary ADNOC Distribution. In October 2018 ADNOC sold 5% of its stake to Baker Hughes, a General Electric company. As of mid-2018 ADNOC was looking to sell as much as 40% of its refining subsidiary, ADNOC Refining. The parent company, however, will remain entirely state owned. 

As to the target markets for UAE oil and gas products, the trend continues to focus on Asia, with particular emphasis on China, Korea and Japan. Moreover, continued strengthening of the diplomatic and economic alliance between Saudi Arabia and Abu Dhabi has led to a proposed joint investment in a $45 billion oil refinery and petrochemicals complex in India. The United Arab Emirates is orientating itself towards key growth markets and looking at opportunities to align its entire oil and gas capacity with those markets.

Regulatory overview


What are the primary laws and regulations governing the oil and gas industry in your jurisdiction?

The United Arab Emirates consists of a federation of seven emirates (ie, Abu Dhabi, Dubai, Sharjah, Ras Al Khaimah, Ajman, Umm Al Quwain and Fujairah). The Federal Constitution apportions powers between the Federal Authorities and each emirate. The federal authorities of the United Arab Emirates (ie, the Federal Supreme Council, the president and vice president, the Cabinet, the Federal National Council and the Federal Judicial Authority) are responsible for matters such as foreign affairs, defence, education and public health. The emirates have jurisdiction over all matters not assigned to the federation, including natural resources.

Article 23 of the UAE Constitution deems natural resources (including oil and gas) in each emirate to be the public property of that emirate. Therefore, the industry is subject to a variety of legislation, including:

  • Federal Law No 14 of 2017 on Trading in Petroleum Products (regulating the trade of petroleum products);
  • Federal Decree Law No 8 of 2017 on Value Added Tax (imposing value added tax at a rate of 5% on taxable supplies of goods and services);
  • the Abu Dhabi Tax Decree 1965;
  • Abu Dhabi Law No 7 of 1971 (establishing Abu Dhabi National Oil Company (ADNOC));
  • Abu Dhabi Law No 2 of 1973 (regulating petroleum ports);
  • Abu Dhabi Law No 4 of 1976 (on gas ownership);
  • Abu Dhabi Law No 4 of 1976 (a gas ownership law entitling ADNOC to exploit Abu Dhabi's gas resources through joint agreement and projects undertaken with third parties);
  • Abu Dhabi Law No 8 of 1978 (in relation to conservation of petroleum resources);
  • Abu Dhabi Law No 1 of 1988 (establishing the Supreme Petroleum Council); and
  • Dubai Law No 19 of 2009 (establishing the Dubai Supreme Council of Energy).

The United Arab Emirates is also party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and various other bilateral investment treaties with other countries.

What government bodies are charged with regulating the oil and gas industry and what are the extent of their powers?

The energy sector is federally regulated by the UAE Ministry of Energy and Industry, which develops policies and legislation to achieve secure, sustainable and competitive energy supply in the United Arab Emirates.

However, the oil and gas resources of each emirate are more specifically regulated therein:

  • In Abu Dhabi, the Supreme Petroleum Council creates and oversees the implementation of general and fiscal policy in relation to domestic oil and gas resources. The council also functions as ADNOC's board of directors.
  • In Dubai, the Dubai Supreme Council of Energy is responsible for policy development with a view to developing new energy sources.
  • In Sharjah, the Petroleum Council of Sharjah is responsible for regulating the oil and gas industry and granting concessions.

Exploration and production


Who holds the rights to oil and gas reserves in your jurisdiction?

Article 23 of the UAE Constitution gives ownership over all "the natural resources and wealth of each Emirate" to that emirate. Rights to the oil and gas reserves in each emirate are typically awarded to state-owned exploration companies or international companies whose majority shareholder is a state-owned company by way of a licence or concession agreement, the content of which will differ between the emirates and on a case-by-case basis. For example, pursuant to the Abu Dhabi Gas Ownership Law (Abu Dhabi Law No 4 of 1976), the emirate of Abu Dhabi is the sole owner of all natural gas (which includes condensate) discovered in its territory. This means that concession rights in relation to gas in Abu Dhabi are limited to the right to extract the gas in return for a handling and delivery fee. Only Abu Dhabi National Oil Company (ADNOC) is permitted to sell gas extracted in Abu Dhabi.

Is there a distinction between surface and subsurface rights?

Under the federal laws of the United Arab Emirates there is no distinction between surface and sub-surface rights. Given that each emirate owns the natural resources within its borders, concessions granted by each emirate may differ in the treatment of surface and sub-surface rights. Generally, oil and gas concessions awarded by each emirate contain the right to enter, be upon and leave the surface of the land (or sea) subject to the concession for the purposes of oil and gas exploration and production activities. However, in some cases rights to the sub-surface may be limited to specific geological formations or stratigraphic intervals only. It is anticipated that this approach will become increasingly common as the unconventional petroleum industry develops in the United Arab Emirates.

What rules and procedures govern the grant of rights for exploration and production purposes (eg, through licences, leases, concessions, service contracts, production sharing agreements)?

While the procedure for obtaining exploration and production rights will vary between the emirates and on a case-by-case basis, in most circumstances such rights are awarded by way of a concession or licence agreement. For example, in Abu Dhabi, the Supreme Petroleum Council sets production targets and grants licences and concessions (on behalf of the Abu Dhabi government) to ADNOC or consortiums between ADNOC and international operating companies (IOCs) which hold a minority interest. 

What criteria are considered in awarding exploration and production rights (eg, are there any restrictions on the participation of foreign investors/companies)?

Concessions will usually be awarded by the relevant emirate to joint ventures between state-controlled entities and IOCs which have a minority interest. For example, where ADNOC is undertaking exploration or production activities in Abu Dhabi as part of a joint venture with an IOC, ADNOC’s ownership interest will not be less than 51%. Other ownership structures are possible depending on individual circumstances. For instance, some concessions may be awarded entirely to IOCs. Similarly, the operating structure of a concession may vary. In some cases, the concessionaire may be a special purpose vehicle formed between the state-controlled entity and the IOC, whereas in other cases it may be an IOC alone or the state-controlled entity alone.

Joint ventures

Are there any special legal provisions applicable to joint ventures?

Various laws govern the formation and regulation of joint ventures, depending on the purpose of each joint venture and the form and nationality of its partners. UAE Federal Law No 2 of 2015 (the Commercial Companies Law) prevents foreign ownership exceeding 49% outside of various free trade zones. While oil companies with concession agreements may be exempt from this restriction, in order for a joint venture to be granted a concession in Abu Dhabi, ADNOC must hold a majority interest in the joint venture.

In a recent development (while not applicable to the oil and gas sector), Federal Law No 19 of 2018 (the Foreign Direct Investment Law) enables foreign investors to own 100% of companies in certain designated sectors.

Third parties

Can exploration and production rights be transferred to third parties?

The ability to transfer exploration and production rights will depend on the terms of the individual concession. As a rule, concessions usually prevent transfers and changes in control without the express approval of the government of the respective emirate. In Abu Dhabi, for example, transfers of exploration and production rights must have the approval of ADNOC and the Supreme Petroleum Council, unless the transfer is to the transferor’s wholly owned affiliate.


Is hydraulic fracturing (‘fracking’) permitted in your jurisdiction?

At present, no legislation explicitly deals with fracking. However, fracking may be expressly permitted under the terms of individual concessions.

Transport and storage

Legal framework

What is the general legal framework governing the transportation and storage of oil and gas resources in your jurisdiction?

Transportation and storage of crude oil is regulated at the federal level and by codes of practice established by each emirate. Federally, the responsible authorities are the Ministry of Energy and Industry and the Ministry of Climate Change and Environment. The United Arab Emirates has no federal framework with respect to natural gas transport and storage. 


How is cross-border transportation of oil and gas resources regulated?

While no specific laws govern marine and ground transportation of oil and gas resources, provisions of various laws are relevant. For example, Federal Law No 24 of 1999 (Protection and Development of the Environment) prohibits pollution from marine and ground transport and necessitates measures to protect the environment.

The United Arab Emirates has ratified numerous international treaties which are relevant to marine and ground transportation. These include the Basel Convention on Hazardous Waste, the Convention on Marine Pollution by Dumping Waste and Other Matters, the Kyoto Protocol on Climate Change and the Convention on Biological Diversity, among others. The focus of such treaties is largely on the protection of the environment and limitation of pollution.

In Abu Dhabi, Abu Dhabi National Oil Company’s (ADNOC) Petroleum Port Authority is responsible for the supervision of port activity, the application of international legislation and the testing and approval of marine personnel, vessels and facilities. 

Are there specific provisions governing marine and ground transportation of oil and gas resources?

There are no federal laws specifically governing the cross-border transportation of oil and gas.

Gas is imported to Taweelah, Abu Dhabi from Qatar by the Dolphin Gas Pipeline. From Taweelah, gas is distributed to other parts of the United Arab Emirates and Oman using the Eastern Gas Distribution System, the Al Ain-Fujairah Pipeline and the Taweelah-Fujairah Pipeline.

The Abu Dhabi Crude Oil Pipeline (Habshan-Fujairah pipeline) transports crude oil extracted from ADNOC’s onshore operations to Fujairah. Petroleum exports from Abu Dhabi are handled by the Jebel Dhana, Ruwais, Umm Al-Nar, Das Island and Zirku Island terminals. 

Construction and infrastructure

How are the construction and operation of pipelines, storage facilities and related infrastructure regulated?

The ruler of each emirate owns the land within the boundaries of such emirate. As such, rights to construct pipelines, storage facilities and related infrastructure must be granted by the ruler of the applicable emirate. In the event of cross-emirate infrastructure (eg, the Dolphin pipeline), the federal ministries coordinate the implementation of such projects under the guidelines of national policies and strategies. 

What rules govern third-party access to pipelines and related infrastructure?

Each emirate regulates access to pipelines and related infrastructure and may give access to third parties pursuant to concession or commercial agreements.

Trading and distribution


How are oil and gas resources traded in your jurisdiction and what (if any) regulations and procedures apply to oil and gas sales, distribution and marketing activities, both nationally and internationally?

Federal Law No 14 of 2017 on Trading in Petroleum Products provides that any entity wishing to participate in, among other things, the import, distribution, transport, sale or storage of petroleum products, must first obtain a trading authorisation issued by the local authority of the applicable Emirate. The trading authorisation will specify the petroleum products the licensee may trade.

Is oil and gas pricing regulated in your jurisdiction?

Yes. The federal government, through the Ministry of Energy and Industry, regulates the price of oil and gas consumed within the United Arab Emirates.

Occupational health and safety and labour issues

Health and safety

What health and safety regulations and procedures apply to oil and gas operations (upstream, midstream and downstream)?

Federal Law No 8 of 1980 applies to all persons working in the United Arab Emirates (with a limited number of exceptions, including government employees) and regulates all aspects of labour relations in all industries. Environmental Law No 24 of 1999 has a particular focus on the prevention of pollution and protection of the environment against adverse effects created by external activities. Each emirate also has its own Environmental Agency. For example, the Environmental Agency Abu Dhabi has developed an environmental protection enforcement framework which involves inspections and prosecutions. 

Labour law

Are there any labour law provisions with specific relevance to the oil and gas industry (eg, with regard to use of native and foreign personnel)?

The United Arab Emirates has no labour laws specific to the oil and gas industry. Federal Law No 8 of 1980 applies to all industries. Non-UAE nationals may be employed in the United Arab Emirates only after approval by the Labour Department of the Ministry of Labour and Social Affairs and the provision of a work permit. 

What is the state of collective bargaining/organised labour in your jurisdiction’s oil and gas industry?

Article 112 of Federal Law No 8 of 1980 prohibits strikes, which may be punished by temporary suspension. However, employees may submit a collective written complaint to the Ministry of Labour, which will appoint a labour committee to investigate the compliant.

Federal Law No 3 of 1987 also makes it a criminal offence to participate in a trade union or strike.

Environmental protection


What preliminary environmental authorisations are required before commencing oil and gas-related activities?

A licence is required from the Federal Environment Agency before commencing any oil and gas-related project. Federal Law No 24 of 1999 for the Protection and Development of the Environment requires a project owner to apply for a licence to the Federal Environment Agency and the local authority in the relevant emirate. These entities will then conduct an environmental impact assessment on the proposed project. The applicant will be informed within a month of submission of the application whether a licence will be granted. 


What environmental protection requirements apply to the operation of oil and gas facilities?

Federal Law No 24 of 1999 for the Protection and Development of the Environment is designed, among other things, to protect the environment, control pollution and develop natural resources.

This law prohibits, among other things, the discharge of any polluting substance resulting from drilling, exploring, testing of wells or production into the water or land in the United Arab Emirates unless appropriate measures are taken to safeguard the environment. Owners of establishments dealing with hazardous waste must keep a registry of such wastes, methods of disposal and the parties contracted to receive such waste.

The Federal Environment Agency, in conjunction with environmental authorities in each emirate, issue guidelines on environmental safety and the management of waste resulting from the production, transportation and exportation of oil and gas. Monitoring is also conducted to ensure compliance with the same.


What are the consequences of failure to adhere to the relevant environmental regulations and to what extent can operators be held liable for environmental damage?

Any person or entity who breaches any provision of Federal Law No 24 of 1999 which results in damage to others or the environment is responsible for all costs associated with the remedy of such breach. Such costs include damages as well as rehabilitation costs. Breaches of specific provisions of this law can also result in large fines and/or imprisonment. Breach of environmental laws may also create liabilities or give rise to termination rights under specific concession agreements.

Taxes and royalties


What taxes (direct and indirect) and/or royalties apply to oil and gas activities in your jurisdiction (including upstream, midstream and downstream activities)?

While there is no federal UAE tax, each emirate has its own tax decree which applies to all businesses. However, in practice, taxes are currently imposed by each emirate on companies involved in upstream activities under concession agreements and the tax rates are therefore agreed on a case-by-case basis. The fiscal regime applicable to each concession in Abu Dhabi is determined by the Supreme Petroleum Council. Details of such fiscal regimes are not publicly available; however, the regime usually involves a mixture of royalties on production and tax which can range from 55% to 90%, depending on the product generating the taxable income.

Imports and exports

What taxes and duties apply to oil and gas imports and exports?

The United Arab Emirates is a member of the Gulf Cooperation Council (GCC) Customs Union, and goods moving between GCC member states are therefore not subject to customs duty. There is also no customs duty payable on the export of foreign or national goods from GCC member states. However, foreign imports are subject to a customs duty of 5% of the cost, insurance and freight value of imported goods.



How is the decommissioning of oil and gas facilities regulated?

Decommissioning of oil and gas facilities in Abu Dhabi is regulated on a case-by-case basis pursuant to the applicable concession agreement.

However, the United Arab Emirates is a party to the 1989 Kuwait Protocol, which requires the United Arab Emirates to empower its national authorities with the right to require the operator of an offshore installation to remove the installation, in whole or in part. The United Arab Emirates is also required to abide by any guidelines issued by the organisation established by the contracting states when considering whether to remove any offshore installation.

The International Maritime Organisation 1989 Guidelines and Standards on the Removal of Offshore Installations require the removal of abandoned or disused offshore installations unless non-removal or partial removal is permitted in accordance with the guidelines. In determining whether an offshore installation can remain, certain matters must be considered, including:

  • the impact on the marine environment;
  • the risk of material shifting in the future;
  • costs associated with removal; and
  • impacts on the safety of navigation.

Dispute resolution


How are oil and gas disputes typically resolved in your jurisdiction?

Disputes arising in connection with a concession agreement will be governed in accordance with the terms of the concession. Typically, concession agreements provide for resolution of disputes by way of arbitration.

As a party to the New York Arbitration Convention, a foreign arbitral award should be recognised and enforced in the United Arab Emirates, subject to applicable legal conditions.

Anti-corruption measures

Dishonest practices

What regulations and procedures are in place to combat bribery, fraud, collusion and other dishonest practices in the oil and gas sector in your jurisdiction?

The United Arab Emirates is a member of the United Nations Convention Against Corruption, which prohibits different forms of corruption including bribery, abuse of function and private sector corruption.

The UAE Federal Penal Code also penalises public servants and employees of international organisations who request or accept benefits in return for performing or refraining from performing an act that they would otherwise not perform or refrain from performing and penalises persons who promise public servants a benefit in order for such public servant to perform or refrain from performing a particular action such public servant is empowered to perform.