Oman's Energy Industry

Oman’s oil and gas industry in transition

Oman’s oil and gas industry has been the main driver of the country’s economic development since commercial production began in 1967. The nation is now the largest producer of hydrocarbons in the Middle East outside of OPEC members. Traditionally around 70% of the Omani state’s budget is fuelled by revenues from taxation and operations of its oil and gas production, and the sector accounts for around 30% of Oman’s GDP. However, the country is stressing diversification of its economic foundations using the oil and gas sector as a base under its Vision 2040 programme. The initiative looks to see non-oil activities provide 90% of the nation’s GDP.

Government approvals and policy in its energy industry are dictated by the Ministry of Energy and Minerals, with NOC Petroleum Development Oman being the largest operator with the largest oil reserves in the country. The state-run entity is followed in size and scope by American E&P company Occidental Petroleum, which has the largest presence of any foreign company in the country. The government has also created other state-run players that have lesser stakes in upstream, midstream and downstream operations.

Most of Oman’s oil and gas resources are traditional, with limited unconventional and zero shale plays. EOR techniques have allowed the country to continue producing from its maturing assets. The country has continued successfully up its reserves and launch production expansion projects on its upstream assets.

While local oil production meets the demand for domestic energy consumption, the country is active in transitioning away from oil and gas towards reliance on solar and wind facilities in its power generation sector. The government has set a goal of reaching 30% of the nation’s electricity demand being met by renewables by 2030, with two-thirds of this expected to be from solar followed by wind and waste-to-energy sources. The government has signed deals with large international entities such as BP to explore renewables options by 2030.

“The possibilities for Oman are enormous. There are many oil and gas resources to be explored and developed, and solar and wind offer a lot of potential as well,” Chris Breeze, country chairman for Shell Development Oman, told The Energy Year.

“There are also significant opportunities to use digital technologies to interact with customers to enhance the energy efficiency of the electricity network. There are such large quantities of in-country resources available, and we have only just begun to unlock the potential of energy efficiency.”