Dubai Reports Crude Oil Production Falls By 30%+ In Past Two Years - Dow Jones

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LONDON (Dow Jones)--Production of Dubai's crude oil has fallen as much as a third in the past two years and is a fraction of that recorded in some government statements, company documents show, undermining the already fragile position of one of the world's top three oil price reference points.

Current output in the booming Persian Gulf sheikdom, one of seven semi-autonomous enclaves in the United Arab Emirates, is some two-thirds below the figure released by the national government, according to calculations by Dow Jones Newswires using data from the previous operators of the fields. It has fallen as much as a third in the past two years. The Dubai government took over operating the oil fields in April from a joint-venture led by ConocoPhillips Corp. (COP), which has since complained of poor financial returns due to the structure of the previous operating agreement.

Daily output in the first three months of this year fell to between 65,000 barrels and 80,000 barrels against the 240,000 barrels stated on the U.A.E. government's Web site. Dubai's crude is often used as a basis to price oil exports to Asia, including cargoes from Iran and Saudi Arabia. Like blended Brent crude sourced from the North Sea between the U.K. and Norway, its relevance is under threat as supplies dwindle.

To deal with this, Platts, a unit of McGraw-Hill Cos. (MHP) that assesses the price of physical oil, last year allowed crude from Abu Dhabi's Upper Zakum field, similar in its specification to Dubai's output, as an alternative to Dubai. Also, the Dubai government this year threw its weight behind a regional oil futures contract on the Dubai Mercantile Exchange, or DME, based on some 700,000 barrels a day of oil of production from neighboring Oman in an attempt to create a new benchmark.

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