The proven oil reserves in the GCC are supposed to be 615bn barrels according to the CIA World Factbook, but 500bn barrels following to the data of the US Energy Information Administration EIA. Abu Dhabi National Oil Company ADNOC reports in the homepage that the GCC accounts for 45% of global proven oil reserves and 20% of world gas. Other players, as Crescent Petroleum in the Emirates, report 56% share of conventional oil and 40% of proven gas reserves; other authoritative sources as the Kuwait based Diplomatic Center for Strategic Studies mention 25% for oil and 17% of gas reserves. The below mentioned figures also differentiate from the OPEC official figures, regularly mentioned in the media to give imaginary numbers and lie about reserves. McKinsey forecasted in 2007 cumulative oil revenue of $2.4trn by 2010 and of $8.8trn by 2020 at $100/barrel for the 2007-2020 periods. Ernst & Young forecasted in the same year earnings of $4.7trn from oil exports by 2020 at an oil price of $50. The Qatar National Bank has just released a potential valuation of $74trn for the oil reserves of the Gulf, with a barrel at $150, and $65trn for gas reserves (based on a price of $7.5 per thousand cubic feet). How realistic are really all these figures? Let’s make the calculation by ourselves.
Proved oil reserves barrels / proved gas reserves cubic feet $ market valuation today oil/gas = total
US Energy Information Administration EIA, December 2011 oil $85 barrel / gas $7.5 per thousand cf
Saudi Arabia 267.0bn / 283.5trn 22.7trn / 2.2trn = 24.9trn
UAE (96% Abu Dhabi) 97.8bn / 227.9trn 8.3trn / 1.7trn = 10.0trn
Qatar 25.4bn / 895.8trn 2.2trn / 6.7trn = 8.9trn
Kuwait 104.0bn / 63.5trn 8.9trn / 0.5trn = 9.4trn
Oman 5.5bn / 30.0trn 0.5trn / 0.2trn = 0.7trn
Bahrain 0.1bn / 3.3trn 0.0trn / 0.0trn = 35bn
GCC 500.0bn / 1,504trn 42.5trn / 11.3trn = 53.8trn
% of the world 18% / 24%
Total oil supply bpd / gas cubic feet production $ market valuation year oil/gas = total
US Energy Information Administration EIA, December 2011 oil $100 barrel / gas $7.5 per thousand cf
Saudi Arabia 11.2m / 3.1bn 407bn / 23.2bn = 430.2bn
UAE (96% Abu Dhabi) 3.1m / 1,8bn 113bn / 13.6bn = 126.6bn
Qatar 1.6m / 4.1bn 60bn / 31.0bn = 91.0bn
Kuwait 2.7m / 0.4bn 98bn / 3.1bn = 101.1bn
Oman 0.9m / 1.0bn 33bn / 7.2bn = 40.2bn
Bahrain 0.5m / 0.4bn 2bn / 3.3bn = 5.3bn
GCC 20m / 10.8trn 713bn / 81.4bn = 794.4bn
% of the world 22% / 10%
Tourism is a priority. The very ambitious project related to the tourism sector as major investment priority for all GCC countries is also a jungle of unreliable inflated numbers, considering the prospected investment volume of €1.8trn in the years 2007-27, which should increase the contribution of travel & tourism to the total GDP. According to data released by WTTC, the prospected contribution of tourism to the GDP of the two most preferred countries for vacations Qatar and the Emirates should increase in the UAE to 23.7% in 2018 from 22.6% in 2008 and in Qatar to 12.9% from 12.4%. Alpen Capital Dubai reported in a recent study a potential of 64.2m tourists arrivals in the GCC by 2020, and 53.6m by 2015 (prospected revenues $27bn), from 41m in 2010 (reportedly revenues of $16bn). Actually the revenues achieved from tourists in restaurants and hotels in Dubai represented in 2010 11.6% of total GDP (source Dubai Chamber), reported to be $82bn following to the report of the DIFC, but $76bn in some documents and $97bn in others reports of the Dubai Statistic Center.
A wild prairie of inflated expectations and irrational numbers: The combined Gulf-GDP, supposed in the media to soar to $2.3trn by 2020 from $800bn in 2007, mostly supported by construction and real estate projects, is an inflated unreliable number, as well as the controversial worth of the pipeline of projects estimated in 2009 to be $15trn (hereof 66% real estate), also because of the substantial number of cancelled or delayed projects in the area since 2008. McKinsey projected for the region to reach a combined GDP equivalent to Germany by 2050 ($3.8trn, source CIA World Factbook). The Economist Intelligence Unit reported about a GDP growth of annual 4.5% to $2trn by 2020. Ernst & Young believed in a GDP of $4.7trn by 2020. The Qatar National Bank predicted a GDP in the GCC of $1.5trn by 2013. The Saudi Arabian SAMBA predicted a GDP of $1.38trn by 2012 after $1.12trn in 2008. The Institute of International Finance reported a GDP of $1trn in 2010 after $877bn in 2009 and $800bn in 2007. All different expectations based on different valuations of oil between $50 to $70 per barrel, without taking in consideration gas and other form of incomes.
The real imported inflation is definitively higher than reported, and is masked in the Gulf constantly by government subsidies and strong wage hikes for civil servants. The basked of inflation in the Gulf is supposed to be 55% to 60% for rents, 15% to 35% for food, and 15% to 20% for transportation (source Department of Planning and Economy). The Abu Dhabi Chamber of Commerce and Industry warned in 2008 that inflation was increasing household spending for loans: families borrowed more than they can afford, and spent more than they earned. Further to the existing inflation problems the GCC economy also has a large impact on expats remittances, which represent a substantial lack of purchasing power and consumer spending in the region ($40bn in 2011, 4.5% of GCC GDP $880bn, but less than in 2007 with $60bn; source World Bank; Association of Money Transfer Networks).
The IIF also forecasted the GCC to achieve this year an external current account surplus of $358bn, up from $327bn in 2011. The net GCC foreign assets, reported by the IIF to be $2trn in 2008, and prospected to be $1.9trn this year, should increase to $2.1trn by end of 2013. Controversially McKinsey estimated for 2012 net GCC foreign assets of $7trn, following investment of $1.5trn 2008-12 from the GCC abroad at $50 per oil barrel. McKinsey also predicted an implied investment of $2bn petro-dollars abroad per day at $70 a barrel, and a return on existing assets abroad of $1.6trn by 2020, without investing abroad after 2008. McKinsey Global Institute also forecasted for the period 2007-2020 period cumulative oil revenue of $2.4trn by 2010 and $8.8trn by 2020 at $100/barrel, while Ernst & Young forecasted oil revenues of $4.7trn by 2020 at $50/barrel.