Sheikh Zayed bin Sultan Al Nahyan was not only the founder of the most successful political federation in the modern history of the Arab World but also the architect of the UAE’s innovative, globalised oil and gas sector.
The late UAE President defied the populist trend in OPEC in the 1970’s to nationalise the assets of foreign oil companies. Instead, he signed joint ventures and concession agreements with Seven Sisters like Exxon, Shell, BP and Total to build technical capacity at ADNOC, the most efficiently managed NOC in the Middle East. Sheikh Zayed also approved the Dolphin Project with Qatar and Oman, the largest cross-border GCC venture even now.
I knew the Supreme Petroleum Council’s decision to raise UAE’s long term production target from 4 to 5 million barrels a day in 2016 was de facto recognition that secular demand growth for black gold would peak in the next decade as the world’s auto fleets electrified with the vengeance. It thus made strategic sense to monetize the UAE’s hydrocarbon assets as soon as possible and diversify its economy from oil and gas revenue dependence. This was the impetus behind the creation of Mubadala and its merger with IPIC as well as new partnerships with Japanese, Chinese and South Korean companies in upstream, refining, trading and other downstream ventures.
So the UAE’s national interest in increasing its oil production to 5 MBD by 2030 is incompatible with Russia and Saudi Arabia’s focus on the management of oil prices via a strict diktat on OPEC member output quotas. This has nothing to do with any alleged geopolitical tensions with Riyadh. After all, Mubadala has invested in Saudi Downstream energy assets and Aramco is a major investor in Fujairah.
The UAE and Saudi Arabia are both strategic US allies in the Gulf and both countries face an existential threat from Iran’s subversive proxy militias as well as terrorist networks like Al Qaida and ISIS. The UAE has been a consistent backer of King Fahd and King Abdullah’s successive blueprints for a Arab-Israeli peace settlement. The Abraham Accords have been signed by Bahrain, Morocco, Sudan as well as the UAE. Saudi Arabia does not oppose this historic diplomatic rapprochement with Israel.
It is imperative that both Moscow and Riyadh recognize that the UAE will not back down from its demand for a higher baseline OPEC quota and the future stability of the world oil market depends on the resolution of this issue.
The UAE is Arabia’s oasis of globalisation, civilised values and religious tolerance in a region devastated by ethnic, tribal and sectarian conflict. This is the reason the Biden White House is doing its best to grant the UAE a bigger voice in OPEC+ and in the diplomatic chancelleries from Marrakesh to Bangladesh.
Sheikh Zayed still remains the guardian angel of the wonderful country that he founded in 1971, a country I am proud to have grown up in and to call home.
