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	Oman		Info-Prod Country Guide
CHARACTERISTICS   INDICATORS   THE ECONOMY   INVESTMENT ISSUES   PROJECTS   PROSPECTS

The Economy General Government spending continues to be the driving force in the Omani economy, and it is directly linked to oil revenues. Oman's oil output of 900,000 barrels per day (bpd) provides about 75 percent of annual state revenue. Oman's 1997 budget expects increased revenues of US$ 5.31 billion and increased spending of US$ 5.90 billion. The estimated deficit in 1997 of US$ 683 million is higher than the US$ 382.2 million deficit projected within Oman's 1996-2000 five-year plan. Oil income is expected to account for US$ 3.9 billion, gas revenue for US$ 179.4 million and other income for US$ 1.12 billion. Revenue calculations for the 1996-2000 plan were based on an average oil price of US$ 15 per barrel, a price exceeded in 1996 by nearly US$ 5 p/b. Oil Sector One of the bigger government-to-government deals between Thailand and Oman involves a deal to supply liquefied natural gas (LNG) to Thailand. Shipments will be one million tons in 2003, rising to between 1.7 million and 2.2 million tons in 2005. Earnings from the LNG project are set to change fundamentally the structure of Oman's revenues from the exploitation of its natural resources. Yet, oil will continue to be the driving force of the economy and every effort is being made to maximize the potential of Oman's oil resources. Oil currently accounts for 78 percent of the country's exports and 37 percent of gross domestic product. The country's main producer, Petroleum Development Oman (PDO), is 60 percent owned by the state and 34 percent by Shell Petroleum Company. Other producers in Oman are Occidental of Oman, Japan Petroleum Exploration Company (Jape), Elf Petroleum Oman and International Petroleum Bukha. The government plans to increase production to 1 million b/d, possibly by the year 2000. As part of this strategy new acreage has recently been let for this purpose. Exploration and production sharing agreements were signed in June 1996 with Jape, Triton Energy Corporation and Phillips Petroleum Company (both of the US, and a joint venture of Partex (Oman) Corporation) and Atlantic Richfield Company (Arco). Including agreements signed in 1995 with Elf Aquitaine and Total, recent agreements contain commitments to total investment worth US$ 270 million. Oman's ambition to increase production goes hand in hand with increases in reserves; in 1995 PDO added about 400 million barrels, bringing reserves to 5,230 million barrels. Gas reserves have also been climbing, with expected reserves now standing at 27.42 million cubic feet (mcf) and proven reserves at 16.2 mcf. PDO currently produces an average of 12.5 million cubic meters a day, earning US$ 145 million for the government in 1995. Non-Oil Sector Non-oil sectors grew by more than 10 percent over the last three years. The fifth five year plan (1996-2000) concentrates on creating a stable economic framework and human resource development. With plans to raise the contribution of the industrial sector to the domestic product from 5.2 percent (the current percentage) to 15 percent by the year 2020, the Sultanate looks to the next century with great confidence and determination. The service sector recorded an average rise of 66 percent in profits in 1996 compared with the same period last year. The insurance sector recorded a 44 percent rise and the banking sector a 26 percent rise. The tourism sector's profits fell by 24 percent as a result of the expansion taking place in a number of tourism companies. Previous Chapter Contents Menu Next Chapter

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