Dubai Discovers New Oil Field Amid Debt Woes

Dubai announced Thursday the discovery of a new offshore oil field in the Persian Gulf that could boost its economy at a time when the United Arab Emirates’ second-largest sheikhdom is struggling with a multibillion-dollar debt pile.

“I can confirm that oil has been discovered and expect production to start within a year,” Sheik Ahmed bin Saeed Al Maktoum, the chairman of government-owned Dubai Petroleum Establishment, or DPE, told Zawya Dow Jones, confirming local media reports earlier Thursday that a new offshore oil field had been discovered in the emirate.

Sheik Ahmed, who is also chief executive of Emirates Airline, declined to comment on the size of the find.
In an emailed statement, the media office of Dubai’s ruler Sheik Mohammed bin Rashid Al Maktoum announced the discovery of the new oil field offshore Dubai but didn’t provide any details on its size. The discovery is located east of Dubai’s existing offshore Rashid field, according to the statement.

“We need further details on the size before making any judgments on how it will affect Dubai’s revenues going forward, as information is scant now it is too premature to predict whether this will help Dubai’s finances,” said Angad Rajpal, energy analyst at Prime Emirates.

The discovery, if proven to contain commercial quantities of hydrocarbons, could provide a welcome boost for Dubai after being hit hard by the fallout from the world financial crisis. The emirate is struggling with a debt pile that some experts, including regional investment bank EFG-Hermes, say exceeds $150 billion, and has seen real-estate prices slump.

Wall Street Journal (through Google News)