Dubai's government, under pressure to repay billions of dollars in debt, said Thursday it has discovered a new offshore oil field—the first such find by the city-state in decades.
The media office of the sheikdom's ruler did not provide details such as the size of the field or preliminary estimates of its production capacity, making it impossible to gauge the effect on Dubai's strained budget. An e-mailed statement from the media office announcing the find said the new deposit is located east of the existing Rashid oil field.
Dubai's ruler Sheik Mohammed bin Rashid Al Maktoum "brought the good news of a new oil discovery in Dubai to the people of United Arab Emirates, stressing that the new field will boost the economic capabilities of the state," the statement said.
Dubai is one of seven small sheikdoms that comprise the United Arab Emirates federation. It is struggling to get out from under more than $80 billion of debt racked up during a multiyear building boom. The development push was aimed at diversifying the economy away from the oil sector and into finance, trade and tourism.
The UAE as a whole is the world's third-largest oil exporter, although the vast majority of the nation's reserves are held by the federal capital Abu Dhabi. Dubai's own reserves have been shrinking for years.
Samuel Ciszuk, Middle East energy analyst at IHS Global Insight in London, said the waters off Dubai's coast have been extensively explored, making major discoveries unlikely unless a particularly deep pocket of oil was found.
"Nobody has really high hopes for that area. It's been in terminal decline for quite some time," he said. "Likely it is not going to be a very substantial find in the grand scheme of things."
Ciszuk estimated it could take up to two to two-and-a-half years for commercial production from the field to come online.
Sheik Ahmed bin Saeed Al Maktoum, an uncle and top deputy of Dubai's ruler who heads the emirate's oil affairs department, has been ordered to start exploring the field to determine its reserves and potential, according to the media office statement.
The announcement said the new field will increase the emirate's total output, though it did not say where production stands now or how much potential the new field offers. Dubai does not disclose production levels.
The media office did not respond to a request for further comment.
Calls to government-run Dubai Petroleum, which is responsible for the emirate's offshore fields, went unanswered. The British contractor that operates the fields, Petrofac, declined to comment.
The Dubai-based daily al-Bayan quoted unnamed oil officials saying the new field was "promising."
Oil was first discovered off Dubai's coast in the 1960s. The emirate's existing production comes primarily from four offshore fields: Fateh and Southwest Fateh, and the smaller Rashid and Falah. An onshore field, Margham, mainly produces natural gas and condensate.
The city-state's existing oil reserves are expected to be completely exhausted within two decades, according to UAE government estimates.