In recent years, the UAE has established a leading position as a lubricants producer, exporter, and re-exporter, meeting the rapidly growing demand from emerging countries in the CIS and on the African continent. In 2015, the UAE’s output of refined petroleum products was 842,100bpd, of a total refinery capacity of 1,124,000bpd, which has grown substantially since 2011 when it stood at 657,000 bpd.
Sharjah has been a key player behind the success of the UAE’s lubricants exports; over the years the Emirate has been efficiently improving its oil-derivative production base and has affirmed itself as a downstream business hub, becoming home to a large number of blending facilities, refineries, and many other petrochemical companies.
Sharjah, although endowed with a considerably smaller quantity of hydrocarbons than its Emirati neighbors, has long maintained a policy of supporting a diversified energy sector. It has the well-known Sajaa plant and the recently developed (although discovered in 1979) Zora gas field, which are still providing energy to meet rapidly growing energy demand in the Northern Emirates. In total, the oil and gas sector still accounts for 14% of the economy; however, the government and private sector have been focused on not only fortifying the energy sector but also developing others. A huge opportunity to achieve both goals lies in the downstream sector, whose potential to be a key driver of Sharjah’s economy has been demonstrated by lubricants rocketing up the export list to be one of the Emirate’s strongest export products.
Sharjah-based companies Crescent Petroleum, Unique Group, and Dana Gas are internationally recognized pioneers of the oil and gas industry. They are also integrated companies with operations that span from upstream through midstream and the downstream sector. Likewise, the Sharjah National Lube Oil Company, better known as SHARLU, and Gulf Petrochem have long established themselves as leaders in Sharjah’s lubricants and petrochemical sector and have both earned international reputations. Over a hundred Sharjah-based companies have contributed to the Emirate’s industry. Eagle Oil Refining Company, Sharjah Oil Refining Company, and Sharafco Oil Refinery are just some of the refining companies based in the northern Emirate, while Al Mehdar Water Factory, Arabian Gulf Oil & Grease Factory, and Universal Lubricant are just a few of the lubricants producers that export to dozens of countries around the world.
In this new era of uncertain oil prices, a shift toward activities such as refining and the petrochemical industry presents NOCs and private companies the opportunity for higher profitability, adding value in country. In the midst of weak oil prices, the price of crude fell much faster than the price of refined and petrochemical products, which helped downstream businesses maintain profits. Integrated businesses are the ones benefiting the most in this difficult environment, with their downstream operations able to offset the significantly lower profits in the upstream side of the business.
Another advantage of having a strong oil-derivative industry is that, whereas the upstream sector is capital-intensive and requires a highly-skilled but more limited workforce, the downstream sector is typically labor intensive, involving a much broader supply chain and production processes. Therefore, if Sharjah is to continue diversifying its economy, improving its energy sector by focusing on its downstream sector, it offers greater potential to bolster employment and the development of the SME sector.