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OIL & NON OIL SECTORS OF
THE GCC ECONOMIES
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Anubhav

Table of Contents
Introduction ..................................................................................................................................... 3
Oil Sector of the GCC ..................................................................................................................... 3
Non Oil Sector of the GCC ............................................................................................................. 5
Non Oil Sector of the UAE ............................................................................................................. 9
Tourism: ...................................................................................................................................... 9
HealthCare:................................................................................................................................ 10

PART 1
Introduction
The Gulf Cooperation Council is a regional, intergovernmental economic and political union
consisting of the Arab states of the Persian Gulf, except Iraq. Its member states are
Kuwait, Oman , Bahrain, Saudi Arabia, Qatar, , and the United Arab Emirates.
The GCC is one of the richest oil-based region with the largest oil reserves (489.4 billion barrels)
and nearly 36.7% of the global crude oil reserves. OPEC nations account for 71% of the worlds
total crude oil reserves. The GCC has experienced a remarkable economic boom until late 2008.
The GCC economy grew threefold in size to $ 1.1 trillion from 2002 to 2008. The GCC
economies make up for 52.1% of the total OPEC oil reserves and about 49.5 % of the OPEC
crude oil production. The strong economic performance of GCC can be attributed to growing
global oil demand till late 2008; privatization activities; conducive intra-political environment;
growing assets of central banks and the muscle of the GCC corporate sector.

Oil Sector of the GCC

In 2010, the GCC produced over 25 million barrels of oil each day, and over 44 billion cubic feet
of natural gas, which accounted for about 30 percent of the world's oil production; 15 percent of
gas production, and 32 percent of liquefied natural gas (LNG) exports, according to a study by
Crescent Petroleum data. (http://www.crescentpetroleum.com/html/oil_gas_overview.html)
Country-wise statistics are as follows, Saudi Arabia has 38.7 percent of world oil reserves
whereas Kuwait, the United Arab Emirates (UAE) stand at over 14 percent.

Saudi Arabia has the largest oil reserves in the world of about 264.2 billion barrels and accounts
for 20% of proven conventional oil reserves. It is a world leader in terms of oil capacity, at
around 10.5-11.0 mbpd. Saudi Arabia has been increasing its oil production by investing heavily
in oil, gas and petrochemical projects. Saudi Aramco has secured the first ranking for the
eighteenth consecutive year leading the largest oil companies in the world.
United Arab Emirates (UAE) has oil reserves of about 97.8 billion barrels which is slightly
above 7 percent of the global reserves. It is the 8th largest oil producer in the world and
3rd largest in the Middle East. UAE's has undertaken significant expansion projects to increase
production of the oil and maintain its market stability. UAE has undertaken quite a few
partnerships to help technology transfer for improvement in efficiency. Expansions have been
brought in almost all the existing oil fields within UAE.
Kuwait has the 4th largest oil reserves in the world with a proven oil reserve of 101 billion
barrels. Kuwait's crude oil production on an average is at 2.5 mbpd in 2007 and the country has
planned to increase oil production capacity to 3.5 mbpd by 2015 and 4.0 mbpd by 2020.
Qatar has an estimated proven oil reserve of 15.2 billion barrels that is the 4th largest oil
reserves in GCC countries with oil production around 0.8 mbpd. Qatar has invested USD 80-100
billion in oil sectors (upstream &downstream) in hopes to of economic growth. Currently oil and
gas sector make up more than 62% of Qatars economy. Recently Qatars effort to produce and
export natural gas in the form of LNG, piped gas, gas-to-liquid (GTL) and investments in
petrochemical and fertilizer industries prove avidly the fact that Qatar has been trying to
diversify its revenue base by reducing its historic dependence on oil export revenues.

Kingdom of Bahrain dependence on oil production per se is considerably lower as compared to

other GCC members. Bahrain's proven oil reserves are around 125.0 million barrels. Because of
limited oil reserves, the Kingdom has worked hard to diversify its economy. Bahrain has also
managed to stabilize its oil production, with reserves are expected to last 10 to 15 years.
Omans proven oil reserves are nearly around 5.6 billion barrels with average production of 0.7
mbpd. It is atypical of Gulf oil producers. Omans oil fields are comparatively smaller, less
productive, more widely scattered and more costly per barrel than in other countries. An average
well in Oman produces only about 400 b/d, which is not even one-tenth the volume per well of
the other GCC countries.

The Non-Oil Sector of the GCC

In Comparison to global oil producers where the oil economic sector was simply aiding the
present productive sources within their economies, the oil sector dominates heavily the Gulf
economies being the sole source of wealth for a few.
Over the last decade, GCC countries have heavily invested in sovereign wealth funds as one of
the main tools for economic diversification. A few funds (from Qatar and UAE) have acquired a
few diversified overseas assets, which generated additional revenues. But these overseas
investments havent created jobs in the local economies or contributed to spearhead education
and training of the local labor.
Non-oil sectors had an impact on growth (economic) in all of the GCC economies since the
service sector were the most dynamic, with average growth of around 2.8% between 1991 and
2009. (Devaux, 2013 ) The service sector growth has rapidly increased post 2001, especially in

Qatar (+6.2%) and Bahrain (+5.3%). Most services are closely linked with public sector,
notwithstanding exceptions of Bahrain and the UAE (trade and tourism), however, most of them
have generated only weak value additions. But nonetheless significant steps were taken in
developing new sectors which will have significant growing potential, such as aviation, tourism,
hospitality, logistics and business services, real estate, as well as introduction of green
technologies.
Economic diversification in GCC states is primarily based on reduction of mammoth dependence
of the oil based economy, which subsequently leads to reduction of the role of the public sector
and strengthening of the private sector growth. Oman is the sole country among the GCC that
has plans to privatize the state-owned corporations. On the contrary, in Kuwait and Qatar, the
private sectors share of non-oil GDP is not more than 50%, hence the economic diversification
process still depends significantly on the government.
Qatars Diversification plans are for massive infrastructure development coupled with further
diversification such as manufacturing, communication, construction, trade, real estate and
business services. A proposed 140 billion USD infrastructure building plan will be invested in
the non-oil sector in transport, tourism, sports, health, education and roads and bridges. This
involves the construction of the International Airport at Hamad and also a 36 billion dollar
railway system for hosting the FIFA World Cup in 2020. The country also increased the budget
spending for education, to 15 percent, following the transformation into a knowledge-based
economy.
In the UAE the five per cent economic growth has come from hospitality and manufacturing,
construction and real estate are also leading the growth story. Dubais tourism industry also

particularly has been booming steadily in the last few years: Hotel occupancy rates soared
upto 83.6 per cent in January 2014, coupled by the emirates record air passenger traffic,
according to the latest reports of the MENA survey.
In the Kingdom of Saudi Arabia, government is planning diversification through power
generation, natural gas exploration, also telecommunications, and petrochemicals. It has
undertaken a multi-billion dollar strategy to build six Greenfield economic cities, a significant
step towards its diversification agenda. The major concern however is Saudi Arabias overdependency upon the expat workforce for most of the jobs. There the government is now
recruiting its citizens through a mass drive besides spending on their job training and education.
Bahrain has been the pioneer of economic diversification. Initiatives over the decades for
diversification have included offshore financial services, coupled with investments in human
capital. To spearhead the process of diversification it offered low operating costs and enjoyed a
reputation as the best market accessible to the economies of the GCC. Bahrain also established
financial services sector over four decades of experience.
Oman has a well-diversified private sector covering industry, agriculture, textile, retail and
tourism. Its major industries are copper, mining and smelting, oil refining and cement plants. The
country seeks private foreign investors, for sectors like IT, tourism and higher education.
Industrial development plans focus on gas resources, metal manufacturing, petrochemicals, and
international transshipment ports. (Zughaibi & Kabbani, 2012)
Kuwait is the only country where contribution of most non-oil economic sectors declined post
the Iraqi invasion, after which hundreds of foreign institutions, including banking and investment
institutions, moved elsewhere in the region. Kuwait has not implemented any significant

development projects of economic value, while its dependence on oil revenues has been
increasing. (Asoomi, 2012)
Hence the above citations do avidly present the picture of increasing diversification in the GCC
economies do reduce dependence on oil exports (except Kuwait). The picture below shows the
same diversification processes beyond the conventional oil business in the GCC economies.

Source: (Beaumont, 2014)

Part 2
Non-Oil Sector of the UAE
Tourism:
The UAE has made significant progress in its attempts of diversification to non oil sectors. One
such remarkable performance can be seen in development of its tourism sector. The tourism
sectors success is boasted in its contribution to GDP which has gone to about 10.4 percent from
meagre 1 percent. According to estimates, over 50 million tourists have visited Dubai for its
Shopping Festival and have spent around 88 billion dirhams since its inception. The number of
tourists in Dubai has reached 1.1 million alone while it exceeded 2 million throughout the UAE.
The numbers speak significantly of the growth of sector.

Rising tourist numbers has also injected fresh blood into the airports in the UAE. Arrivals at Abu
Dhabi International Airport have exceeded 10 million for the first time according to estimates.
National airlines Emirates Airlines, Etihad Airways, etc. have contributed a great deal to this
significant progress as they have connected the UAE to a large network of cities across the
globe. Other important economic feature of the tourism sector include the close nodal connection
between the various facilities and services and associated with them the multiple activities, such
as retail trade, internal transport, communications, restaurants, and services and public utilities. If
the tourism sector continues at the pace like this, it will raise its share significantly in the GDP to
an anticipated 12.1 percent, which will be a large enough proportion.

HealthCare:
The UAE healthcare sector can be grouped into two regions; having Abu Dhabi on one spectrum
and Dubai on the other. Healthcare Industry of UAE consists of key autonomous players such as
the Abu Dhabi Health Authority, Ministry of Health and Dubai Health Authority. In a few years,
the UAE healthcare industry has had an unprecedented growth which will continue in future due
to increasing population, epidemic outbreaks like H1N1 and rising prevalence of other lifestyle
diseases. The country has also witnessed an increase in the demand for various healthcare
services, which is indicative of the high healthcare spending in recent years. As per estimates, the
healthcare industry of the UAE has expanded at a CAGR of over 16% during 2011-2014.
(SANA, 2013)
UAE has been known recently as one of the top destinations for medical tourism. Many multinational companies such as Saudi German Group and DM Healthcare are strategizing to expand
within the UAE healthcare market. Also it is seen that new players, including Landmark Group,
are trying to diversify into the healthcare market in following years. Travelers across the world
come in UAE for the cosmetic surgery for which it is well known. (SANA, 2013)
Recent years have had extremely positive developments for the health care market through
collaborations, strategic tie ups between healthcare stakeholders, understanding memorandums
between public and private entities to develop the healthcare industry. Expansion activities are in
the offing by major hospitals which are planning to foray into the market with new entrants.
Government has also been creating viable atmosphere for health care stake holders, investors for
the fast development of the health care system in the UAE. (SANA, 2013)

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