Value of UK exports to Oman in 2014£551 million
Value of UK imports from Oman in 2014£227 million
Oman and the UK: dynamic relationsJuly 1, 2015
The UK is Oman’s biggest foreign investor and one of its top trading partners, with exports of UK goods to Oman doubling between 2007 and 2014. Jonathan Wilks, UK ambassador to Oman, talks to TOGY about the business opportunities available for UK companies in the sultanate and the will to increase collaboration already established between the two nations.
Why do UK-headquartered companies find Oman an attractive place to do business?
Oman is an exciting and dynamic market that many corporations are competing to invest in. It is perceived as a stable country with an incredible vision for the development of its infrastructure and its oil and gas industry.
UK companies also have a historical presence in Oman and understand how the country is changing, and want to play a part in its continued development. The government of Oman is facing a period of low oil prices but the Ministry of Oil and Gas is taking the necessary steps to increase the industry’s profitability. The challenges are being discussed with honesty.
The government is also conscious of the need to diversify the hydrocarbons-dependent economy, and the necessity of creating a highly skilled local workforce. The energy industry in the country is still dominant compared with other industries such as finance and retail, and UK companies can help strengthen non-oil and gas sectors by entering the market.
The UK embassy helped about 500 UK companies doing business in Oman in 2014 by providing in-country expertise and business guides, sign posting to relevant local partners, facilitating meetings, arranging visit programmes and providing networking opportunities. There are also 10 Financial Times Stock Exchange 100 companies with an active presence in Oman.
How are UK companies helping to develop Oman’s energy industry?
BP Oman, the super-major’s local subsidiary, has a 60-percent stake in block 61 and will help the country gain expertise in the production of tight gas. The state-owned Oman Oil Company Exploration & Production has a 40-percent interest as a non-operator and will be involved in the Khazzan tight gas project, leading to the transfer of technology from the oil major to the national oil company.
Shell’s local subsidiary, Shell Development Oman (SDO), is a 34-percent shareholder of Petroleum Development Oman, and is assisting the majority nationalised company increase output at block 6. SDO adds value to Petroleum Development Oman through innovation and training.
Foreign companies entering the market need to commit to the creation of jobs for Omanis. Both SDO and BP Oman train Omanis to be capable of executing complex oil and gas projects.
BP Oman struck a memorandum of understanding with the Port of Duqm and has pledged to build a greenfield acetic acid plant at the port town’s special economic zone. UK company Babcock International, which recently acquired the National Training Institute, is playing a major role in vocational oil and gas training. The company is currently training 100 Omanis to become technicians for BP Oman.
Can these benefits be seen in the economy beyond the oil and gas industry?
Enhancements in the oil and gas industry must have a knock-on effect on the wider economy. Shell’s Intilaaqah programme, for instance, aims to boost entrepreneurship amongst Omanis, and is attempting to shift the economy away from oil and gas.
Areas such as downstream, tourism, fisheries and minerals should all benefit and mature with the help of the revenues accumulated from the upstream sector.
Overall, I want the UK to be a leading partner Oman’s broader economic development through offering technical advice, sharing experience and investment. Although there is a strong UK-Omani relationship, over the past 44 years the sultanate has strengthened ties with China, India and Brazil, as well as European nations and the US.
I of course want the UK to be active and to play a leading role in Oman, but we are happy to compete. That competition benefits Oman too.
Does the Omanisation initiative deter foreign companies from investing in the sultanate?
The Omanisation initiative is absolutely essential for the future of the country, its stability and prosperity. The quotas are to an extent a burden on private investors.
There are two major issues: Some private enterprises are hiring expatriates when they should be focusing more on recruiting from the local pool of talent available, and Omanis must reduce their job and salary expectations. Omanis increasingly understand that they will have to take the opportunities available to them in a diversified economy. The government will not be able to provide public-sector employment to everybody.
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