Business, Economics and Jobs

Abu Dhabi looks to kick the oil habit


The Abu Dhabi skyline seen from Heritage Village, a mock-Bedouin village across the Bay.


Ken Shulman

ABU DHABI, United Arab Emirates — Abu Dhabi’s leadership is preparing for a game-changing moment: the end of oil.

It’s not that the Gulf is on the verge of running dry. Even at double today’s rate of consumption, Abu Dhabi’s oil reserves should last another 40 years. But instead of watching the needle slouch toward empty, the regime has produced Abu Dhabi 2030, an ambitious master plan that sees the city reborn as a dynamic financial center in just 20 years, with clean energy technology and tourism vying for top billing in the national economy.

In the decades following the creation of the United Arab Emirates in 1971, Abu Dhabi has morphed from a dusty land of pearl divers and goat herders into a towering (if still dowdy) world energy center replete with mammoth shopping malls, underground hypermarkets and Olympic-sized luxury hotels. With nearly 11 percent of the world’s proven oil reserves, residents of the UAE capital enjoy per capita incomes rivaling those of Luxembourg and Norway.

Thanks to a rapidly diversifying economy and a restrained development, the West Virginia-sized emirate rode out the financial turbulence of two years ago far better than Dubai, its more profligate neighbor to the north. And Abu Dhabi has also been shielded, at least thus far, from the swell of unrest crashing across the Middle East and North Africa.

In the Abu Dhabi of the future, terra cotta-colored facades are draped in state-of-the-art solar panels, with ripples of sinuous curves evoking Islamic forms and rhythms. Avenues are oriented northwest — as they were before petroleum so brusquely transformed the regional landscape — to capture prevailing winds and mute summer temperatures to (almost) acceptable levels.

Abu Dhabi’s new look is already on display at Masdar City — a carbon neutral, zero-energy city under construction 11 miles outside of Abu Dhabi’s center.

Abu Dhabi 2030 is based on a doubling of the country’s population. The emirate now counts 1.5 million inhabitants, the great majority of whom are migrant workers from Asia. The demographic projections assume an ever-expanding economy to generate the necessary jobs.

The master plan also anticipates a surge of tourists coming mainly to enjoy the city’s cultural and entertainment offerings — most of which do not yet exist, although the contours of the city’s future cultural district are visible on Saadiyat Island, a low-lying expanse of sand and construction sites just seven minutes from downtown. The jewel of the city’s master plan, the cultural district features a slew of world-class museums signed by, among others, Messrs Foster, Frank Gehry and Jean Nouvel.

On neighboring Yas Island — Saadiyat’s venal, sybaritic step-brother — car power is being celebrated. Auto racing fans already celebrate speed and horsepower at the city’s Formula One racetrack, straddled by the futuristic yet elegant Yas Hotel. And now, the recently opened Ferrari World theme park and its world’s fastest roller coaster are drawing day-trippers from as far away as Uzbekistan.

Abu Dhabi’s unusual concentration of resources and power — the emirate is ruled by Sheikh Khalifa bin Zayed Al Nahyan, son of the founder of the United Arab Emirates — allows it to realize projects quickly.

“With the system of governance in place here, there is a tremendous ability to make things happen,” said Michael White, outgoing senior manager at the Abu Dhabi Urban Planning Council. “When the government sets its mind on something like this, there is a very high potential for success.”

But many things need to occur before Abu Dhabi can morph into its post-petroleum incarnation, not the least of which is finding a viable substitute for the fossil fuels that now meet the emirate’s massive electric, cooling and desalination needs — needs that will inevitably grow along with the population. And while its contribution to Abu Dhabi’s GDP has dipped below 50 percent, oil still powers the regional economy.

“Part of supporting the vision of 2030 is reducing our dependency on oil today,” said Adil Ahmed Albuainain, general manager of Dolphin Energy, a major natural gas supplier to the UAE. “It’s good for the environment, but it’s also good for the economy. Especially for young people who have a different mindset and need more options than young people did 20 years ago.”

And while Abu Dhabi’s streets are now quiet (unlike those in nearby Bahrain, to which the UAE has sent its troops, along with Saudi Arabia’s, to quell the protests that began last March), it is unlikely that the emirate’s hereditary monarchy can survive the next 20 years without some political concessions.

In March, 160 UAE citizens — the bulk of them intellectuals — signed a public petition calling for broader freedoms and free elections. (At present, less than 1 percent of the UAE population elects half the members of the UAE’s nominal 40-person legislature. The remaining half is appointed.) There is no way of knowing how such reforms in governance would impact the implementation of Abu Dhabi 2030.

Geography and climate pose further obstacles to the realization of Abu Dhabi’s brave new world. The Persian Gulf is a tad far — and two tads too hot — to lure weekend visitors or substantial business from New York, Toronto or Los Angeles.

But North America isn’t really the referent here. Abu Dhabi is only two hours and 15 minutes from Mumbai by air and under 7 hours from Shanghai, Beijing and Amsterdam.

Should the world’s economy and shipping patterns continue to migrate eastward, Sheikh Khalifa’s necessary gamble could pay off.

At least that’s what the leadership is betting on: the hope that in 20 years Abu Dhabi will find itself at a new epicenter of global trade, with a new generation of emiratis and expats living large, this time off flows of tetrabytes, tourist dollars and energy generated by wind and sun.

“The government has made it clear that it sees Abu Dhabi as an international hub,” White said. “A big part of the plan is celebrating its role as a crossroads of cultures, industries and innovation.”