Calls to policy action in Oman amid oil price slide

MUSCAT, January 27, 2015 – Oman’s Ministry of Oil and Gas is urging operators and services providers in the country to take measure to ensure the continued economical viability of their operations in light of the recent drop in oil prices, an official from the ministry told the Times of Oman on Monday.

According to undersecretary Salim Nasser Al Aufi, companies are being asked to review their budgets and to have another look at “anything that is not generating oil.” The undersecretary estimates that companies’ operating costs in Oman vary between $10 and $15 per barrel.

On the part of the ministry, Al Aufi said there no plans to reduce funds the development of new oil projects. He also stated that Oman would not be cutting its oil output, calling it the “corner stone for tomorrow.” As such, the country remains dedicated to its 2015 crude oil production target of 980,000 barrels of oil per day.

In related news, chief economist at the Oman Investment Fund Fabio Scacciavillani told the daily on Monday that Oman is resilient enough to cope with the current market volatility. “The cautious steps taken in the past budgets have guaranteed enough resources and the steps adopted for the diversification of the economy will help to withstand the oil price dip crisis,” he said.

However, while the World Bank forecasts that Oman will perform much better than its GCC peers in terms of GDP growth in 2015, some analysts urge to government to interpret the slide in oil prices as a call to action. For example, Nasser Saidi, president of Nasser Saidi & Associates and former chief economist at the Dubai International Financial Centre, told the Times of Oman that the oil and gas subsidies in the sultanate ought to be phased out in order to “reduce the budgetary burden.”

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