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Oman: Hydrocarbon Sector
Country Study > Chapter 4 > The Economy > Hydrocarbon Sector

HYDROCARBON SECTOR


Since the first commercial field was discovered at Jibal, west of Adam, in 1962, the petroleum industry has dominated the economy. In 1991 the industry contributed about 43 percent of GDP and 82 percent of government revenues. The government's heavy reliance on crude oil export earnings to maintain its income distribution system and political stability made continued development of this sector a priority.

By early 1977, the newly organized Ministry of Petroleum, Fisheries, and Agriculture prematurely assumed that production had probably peaked at more than 350,000 barrels per dayin the north, including Jibal, was in decline techniques at existing fields, combined with new fields coming onstream, raised average output to 708,000 bpd in 1991.

The principal problem the government faced in the early 1990s was a diminishing reserve base. Proven reserves were estimated at 4.6 billion barrels in 1992, small in comparison with other gulf states. At the mid-1992 rate of production of 725,000 bpd, Oman's crude reserves are sufficient to permit seventeen years of output, compared with nearly 350 years for Saudi Arabia.

Oil prospecting began in 1924 when the Anglo-Persian Oil Company (later renamed British Petroleum) obtained a concession; however, unsuccessful exploratory drilling discouraged further interest. Discoveries in Bahrain and Saudi Arabia during the 1930s stimulated exploration activity. The first concession agreement was signed with Petroleum Concessions, a Western consortium formed by the owners of the Iraq Petroleum Company (IPC). In 1951 the concessionaire's name was changed to Petroleum Development Oman (PDO). In 1993 PDO remained the principal operating company and controlled the bulk of oil reserves and output.

After several years of costly and unsuccessful exploratory drilling, most IPC partners wanted to withdraw from their concession area. In 1960 Royal Dutch Shell acquired an 85 percent interest in PDO; Participations and Explorations (Partex) held the remaining 15 percent share. In 1967 the French firm TotalCompagnie Française des Pétroles acquired 10 percent of Partex's 15 percent interest. In December 1973, the government of Oman, following the participation agreements negotiated by several gulf countries, acquired a 25 percent share of PDO. In July 1974, the government's stake was raised to 60 percent, retroactive to January 1, 1974. Since 1974 the remaining 40 percent has been held by Royal Dutch Shell with 34 percent, Total-Compagnie Française des Pétroles with 4 percent, and Partex with 2 percent.

PDO operates two main production areas: a group of northern oil fields, including Jibal, Fuhud, and Sayh Nuhaydah, that produce lighter grades of crude oil; and a group of southern fields, including Rima, Mamul, Amal, Nimr, Mukhaizna, and Sayyala, that produce heavier crudes. Development of the southern fields was contingent on the suppression of the Dhofar rebellion and the reestablishment of political stability in the sultanate.

Data as of January 1993




Last Updated: January 1993


Editor's Note: Country Studies included here were published between 1988 and 1998. The Country study for Oman was first published in 1993. Where available, the data has been updated through 2008. The date at the bottom of each section will indicate the time period of the data. Information on some countries may no longer be up to date. See the "Research Completed" date at the beginning of each study on the Title Page or the "Data as of" date at the end of each section of text. This information is included due to its comprehensiveness and for historical purposes.

Note that current information from the CIA World Factbook, U.S. Department of State Background Notes, Australia's Department of Foreign Affairs and Trade Country Briefs, the UK's Foreign and Commonwealth Office's Country Profiles, and the World Bank can be found on Factba.se.

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