Oil concession expiry a chance to look ahead

Today marks a significant milestone in the history of Abu Dhabi: the date on which the original 75-year concession covering the oilfields run by Adco ends

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Today marks a significant milestone in the history of the emirate of Abu Dhabi: the date on which the original 75-year concession covering the oilfields run by the Abu Dhabi Company for Onshore Oil Operations (Adco) ends. The concession, signed on January 11, 1939, was followed, decades later, by a period of progress that has led to the nation we know today.

But what does the expiration of the concession mean to the capital? It means that the government will be in charge of the emirate's entire oil reserves and its extraction for the first time since the discovery of oil in the emirate. As Peter Hellyer wrote yesterday, Abu Dhabi's oil industry will take on a new shape. Abu Dhabi National Oil Company has already started evaluating bids for the biggest of its onshore oil concessions that will come into effect in January 2015.

Oil will continue to be important long into the future, but this is a critical period for the UAE as it attempts to achieve a transition away from its dependence on oil towards a knowledge-based economy. Over the past 75 years, Abu Dhabi – and the UAE, after its formation in 1971 – has become one of the world’s major oil producers. Thousands of employment opportunities have been created for young Emiratis, and the industry has contributed greatly to the Emiratisation process. The Government has been investing its oil revenues in developing infrastructure and strengthening other sectors of the economy, with a vision to have “a diversified and flexible knowledge-based economy [that] will be powered by skilled Emiratis and strengthened by world-class talent to ensure long-term prosperity for the UAE” by 2021. Signs of this progress are evident in the nation’s high ranking in the Global Competitiveness Index 2013-2014: the second in the region and the 19th out of 148 economies internationally.

But the country still has a long way to go in that regard. As this new period brings opportunities, it also brings challenges. Driving the evolution of a knowledge-led economy will require more developments in the fields of education, technology and scientific research to open the doors to further innovation.

The UAE has both the technological infrastructure and the financial capacity to foster this transition. However, everyone, from government organisations to private businesses and individuals, needs to be engaged in the process.