KEY INDUSTRIES

OIL AND GAS

Oman produced 103.9 million barrels of crude oil during the first quarter of 2002, a drop of 6.3 percent on the 110.9 million barrels produced in the first quarter of 2001. The Sultanate’s total production of crude oil and condensates fell by 4 percent to 110.6 million barrels in the first quarter of 2002, according to the Ministry of National Economy. Oil prices slumped too, down 9.5 percent from $23.88 in the first quarter of 2001, to $21.62. Japan remains the main importer of Omani oil, taking delivery of nearly 29 million barrels in the first quarter of the year. The opening months of 2002 saw Oman increase its LNG production by 19.2 percent to 166.3 million cu feet at the end of March, up from 139.5 million cu feet in March 2001.
In 2001, Oman produced around 349 million barrels of crude oil and petroleum condensates, matching its 350 million barrel output in 2000. Average daily production in 2001 stood at 956,000 barrels, just up from 955,000 barrels in 2000. Oman’s crude oil reserves stood at some 5,802 million barrels in 2001. The average price of Omani crude fell to $23 per barrel in 2001, compared with an average price of $26.71 in 2000.
Associated natural gas production stood at 270.7 million cubic feet in 2001, up from 249.7 million cubic feet in 2000, while non-associated gas production totalled 459.7 million cubic feet in 2001, up from 297.6 million cubic feet in 2000. By the end of 2001 the Sultanate’s known natural gas reserves stood at around 24.4 trillion cubic feet, up from around 20.9 trillion cubic feet in 2000. Crude oil exports stood at around 332 million barrels in 2001, up from around 327 million barrels in 2000.
In 2001 Oman LNG Company exported 5.9 million tonnes of liquefied natural gas (LNG) to South Korea, Japan, Spain, the United States and Belgium, and 154,000 tonnes of condensates to the United Arab Emirates and France.
Oman Liquefied Natural Gas plant (Oman LNG) is the largest construction project ever undertaken in Oman. The $2 billion Oman LNG plant at Qalhat near Sur is one of the largest plants in the world, a lynchpin of the Sultanate’s drive to diversify away from reliance on oil. It began to export gas in April 2000, when Oman launched the first shipment of 63,000 metric tonnes of LNG to Korea. His Majesty the Sultan officially opened the plant in October 2000.
In 1991, Oman discovered huge natural gas reserves of around 22 trillion cu ft in Wusta (central) region. Oman LNG was launched in 1994 to handle downstream operations, liquidising, shipping and selling the gas. The upstream operation is administered by Petroleum Development Oman (PDO) a joint venture between the government and private companies.
The plant’s annual capacity stands at 6.6 million tons. In October 1996, Oman signed a 25 year contract to supply Korean Gas Corporation ( KOGAS) with 4.1 million tonnes of LNG a year. Later, Oman signed additional agreements with Japanese company Osaka, and an 18 month agreement to supply 130,000 tonnes of Natural Gas Liquids (NGLs) to the French company Total.
Oman LNG runs two LNG production trains, and it has approved plans for a third train. Each train has a production capacity of 3.3 million metric tonnes making the combined 3-train facility one of the largest of its kind in the world.
Multinational oil companies are encouraged to invest in oil and gas exploration and production and in modern technology. Two agreements were signed in 2001, with Australian company Novus for Blocks 15 and 47, and with Hunt Oil for Block 50. In early 2002, Oman signed additional agreements with French company Total-Fina-Elf for Block 34, and with Novus for Block 31. The agreements were for oil and gas exploration and production in some of the Sultanate’s onshore and offshore areas.
Operating companies have carried out surveys in the concession areas, completing geological and geophysical studies and seismic surveys. In 2001 new discoveries added 127 million barrels of oil and condensates and 1.25 trillion cubic feet of natural gas to the Sultanate’s general reserves.

Major new projects

• Yibal oil gathering station project: A new oil gathering station will replace the existing stations, reducing operating costs and absorbing increased production from future oil field expansion. The project is expected to be completed in 2003. Expansion in northern and central Oman in 2001 saw the completion of plans to expand gas facilities at the government plant in Yibal and to build a gas treatment station in the Seih Nahidah field in central Oman. Yibal oil gathering project provides an additional five million cubic metres of gas per day. The second project will add twenty million cubic metres per day. Expanding Yibal is due for completion in 2003, while phase one of the central Oman expansion is due to be completed by 2005.
Increased gas production will meet domestic electricity and water desalination needs and fuel the heavy industries planned for Sohar, including the fertiliser, methanol and aluminium smelter projects, and other small and medium industries. Increased production will boost Oman’s LNG and condensate exports. Projects being implemented by Oman Gas Company include:
• Fahud-Sohar gas pipeline project: this project is to supply natural gas to the industrial estate at the port of Sohar. The gas will be used for industrial projects, which include an aluminium smelter, a methanol project, a chemical fertiliser plant, Sohar refinery and other industries. The project involves a 300 km, 32-inch pipeline to transport gas from Fahud to Sohar. The project is to be completed by the end of 2002.
• Seih Rawl- Salalah gas pipeline: this will supply gas to Dhofar aims to promote investment in Oman and use natural gas to generate electricity and develop industry. Natural gas will be supplied to the private sector owned Salalah power station, Raysut cement factory and other industries at Raysut Industrial Estate. A 700 km, 24-inch pipeline will transport gas from Seih Rawl field in central Oman to Salalah. It was completed in August 2002.
• Gas pressure reduction station in Barka: construction of the private sector owned power station and water desalination plant in the Wilayat of Barka began in 2001, building a pressure reduction station with a capacity of 3.3 million cu metres, to meet the power station’s gas needs. The project is due to be completed by Autumn 2002.
• Gas pressure reduction station in Salalah: a gas pressure reduction station is being built in Salalah to meet future consumer demand at Raysut Industrial Estate.

Industry

In 1995, the 2020 Vision Conference highlighted Oman’s need to diversify its economy and to reduce its reliance on oil in future. Oman’s sixth five-year plan (2001-2005) introduces economic strategies and policies to diversify the Sultanate’s sources of revenue, developing new economic and service sectors. Manufacturing is a key sector to diversify Oman’s economic base, reducing dependence on oil, boosting exports and improving the Sultanate’s balance of trade. Industrial contribution to GDP has increased from 0.5 per cent in 1986 to 5.4 per cent in 2000, increasing its contribution to GDP from RO11.5 million in 1979 to RO401.5 million in 2000.
The aim is to supply cheap Omani natural gas and other local raw materials to local industries. Attention is being turned to information technology and telecommunications, and the implementing a range of programmes to balance development, improve private sector productivity and increase the numbers of Omanis working in the industrial sector.

Tourism

Blessed with beautiful scenery and numerous historical sites, Oman hopes that the tourism sector will drive growth in future. The Ministry of Commerce and Industry has created a Directorate-General of Tourism to build the infrastructure for tourism. Officials want tourism growth to respect the environment and future development.
A new Historical Arms Museum has been opened in Nakhl Fort as part of Oman’s drive to develop forts and castles as tourist attractions. New youth hostels near Sur and in Salalah will encourage young Omanis to visit national tourist sites. In 2001, three tourist service centres were leased to young Omanis at nominal rents to encourage them to manage small tourist projects.
The government has encouraged three major projects: a luxury tourist resort complex, managed by the Shangri-la group, at Bandar Jissah, near Muscat; a high-quality beach hotel near Seeb airport, and a tourist village at Mirbat in the southern area of Dhofar.
The Sawadi tourism project has also made progress. Al Sawadi is a multi-million dollar integrated tourism project, with 12 hotels, two golf courses, a marina, parks, villas and shops. Feasibility studies were completed in 1999 and work is expected to start in 2003.
Salalah Theatre, a project to encourage cultural tourism during the monsoon Summer Festival season, is under construction. It will hold around 8,000 people and will cost around RO 3 million. Austria’s Natural History Museum is looking to develop the Hooti and the Falahi caves in Al Hamra, near Nizwa, as major tourist attractions.
To counter post-September 11th fall-out and restore confidence in Oman’s tourism potential, the Sultanate has invited international press and trade representatives to Oman, to see for themselves that the Sultanate is both stable and open to new types of tourist activities. Oman plans to hold a symposium on crisis management in tourism with Sultan Qaboos University, bringing together government tourist officials and the private sector.
Officials are analysing how many tourists visit Oman and the potential of the country’s tourist attractions, to encourage investors to initiate new projects. It has set up tourist information centres at land borders and airports, particularly during the monsoon season which draws tourists to Oman from across the Gulf States.
The new Omani Tourism and Hospitality Academy is now training young Omanis to work in tourism, in middle and senior management. Its 240 students receive theoretical and practical training for jobs in tourism administration and hotel management, and as tourist guides. Promotion and marketing programmes target both regional and international tourism. Tourism offices have been established in Paris, Rome and the Hague, and tourism and culture days held in European cities. Meanwhile, the National Hospitality Institute offers short courses for those entering the hospitality industry.
Oman has taken part in tourism exhibitions, forums and fairs including the World Travel Fair in Berlin, Arabian Travel Market in Dubai and World Travel Market in London. International activities included 13 international fairs in Europe, America, the Arabian gulf and Japan during 2001, familiarisation visits for German and Italian tour companies, an Omani village at Nijmegen in the Netherlands, and Oman Week in Belgium.
Oman seeks to develop joint initiatives with fellow GCC states and to promote Arab tourism. It invited representatives of leading GCC tourism companies to the sixth Arab Travel Fair conference, The Gulf as a Single Tourist Destination, to discuss ways to market the Gulf region as a whole.

Port development

Oman has a long and illustrious maritime heritage. Sinbad the Sailor is said to have embarked on his fabulous voyages from Oman. Modern port development began in 1974, when Port Sultan Qaboos was built in Muscat, with capacity to handle up to two million tonnes of cargo a year.
The Port of Salalah opened for business in November 1998 with an initial capacity of 900,000 teu. Today, the Port of Salalah has four modern container berths, and Salalah Port Services hope to install two additional container berths by 2003, increasing capacity to more than three million teu. It is already ranked amongst the top 20 container ports in the world.
The Omani government holds a 20 percent stake in Salalah Port Services, which has been awarded a 30 year concession to manage the container terminal and general cargo berths at Salalah. A free trade zone is also planned which will bring additional trade and employment to the Salalah area.
In June 1998, Oman signed an agreement with the Japanese Export and Import Bank, finalising a RO 96 million loan to finance Sohar port. Construction of the 6km breakwater began in 1999 and Hyundai began to dredge the port in spring 2000. The first phase of the project comprises two liquid cargo berths, two bulk berths serving the aluminium smelter, two general cargo berths and a container berth. Dredged to 17 metres, the harbour will be able to handle the largest container vessels in service. A Memorandum of Understanding has been signed with Rotterdam’s Industrial port for the establishment of the Sohar Industrial Port Company which will be responsible for the management of the port, and for the training of Omani personnel. A privately-funded fertiliser plant, due to be constructed at Sohar in 2003, has already signed an off-take agreement. A methanol plant has also signed an off-take agreement with a Netherlands company, with production expected to start in 2005. A refinery and polypropylene plant and possibly an aluminium smelter are also planned.
The port of Khasab in Musandam is being upgraded, to promote new trade across the Strait of Hormuz and attract cruise liners.
See Utilities chapter for further details on ports.

Minerals

Omanis have mined, traded and crafted gold, silver and copper for nearly five thousand years, and the government attaches great importance to the minerals sector.

The Sultanate had signed ten contracts for new mineral licences up to September 2001, and 38 contracts for licence renewals. Omani building materials earned more than RO 406 million and marble quarries earned RO 106.5 million in the year to August 2001. The government encourages the Omani private sector and foreign companies to take the initiative in investing in the minerals sector, to protect the Omani environment. A new geological and geophysical survey aims to identify sites containing copper and gold deposits, and exploratory drilling has been carried out. If the site is viable, the Japanese government will exploit it jointly with an Omani company.
Under a joint programme between the government and Bern University in Switzerland, a survey during the first quarter of this year searched for meteorites in the deserts of Dhofar and Wusta. It found 142 meteorites, which are being examined by experts at Bern University and the Swiss Natural History Museum.
In January 2001, the International Conference on Oman’s Geology drew 400 scientists and researchers from 37 countries to Oman. The conference organised field trips, and has opened new prospects for investment in Omani minerals, paving the way for further scientific studies.

Insurance

The insurance sector plays a vital part in Oman’s trade, industry and tourism. In March 2002, Oman hosted a conference of the Arab General Insurance Association, attracting several international insurance and re-insurance companies. Oman has set up an emergency fund to handle crises in the insurance sector, following problems at Oman National Insurance Company (ONIC).

Agriculture and Fisheries

More than 100,000 Omanis are employed in agriculture and fisheries. Omani farming, livestock, agriculture and fisheries have made great strides since 1970, boosted by a succession of five-year plans. Both sectors can expand in line with sustainable development, and are expected to become mainstays of the country’s diversification plans. Investment in these sectors will increase their productivity in line with government plans. By 2000 Omani agriculture and fisheries supplied 47.6 percent of the country’s human food intake, or 65 percent of all food consumed by the population, and 69 percent of its animal feed requirements.

Agriculture

Technical advice is also given to Oman’s 3,252 bee-keepers.
Officials have launched an ambitious plan to boost date palm yields, distributing 22,000 high yield date palm seedlings. The centres are introducing modern irrigation systems to save water and boost the productivity of cultivated land. Modern irrigation systems have been installed on 11,948 feddans on 2,313 farms. (Feddan = 0.42 hectares)
Trials to improve traditional Arab falaj irrigation methods have upgraded falaj systems to use modern irrigation. This has saved 80 percent of falaj water and expanded the land under cultivation. Officials are installing protective barriers in Falaj Kaid in Bahla and Falaj al Masharib in Ibri to protect agricultural land from seasonal floods.

Research

Research is a cornerstone of Oman’s agricultural development. There are two agricultural research centres, one for research into plant production, the other, with laboratories researching plant protection. Agricultural research has helped Omani farmers to protect their crops, improve the quality and quantity of their production and achieve high yields.
The cloning laboratory in Bahla has produced impressive results propagating and distributing high yield date palm seedlings to farmers. Recently, the laboratory handed out 22,000 seedlings, and will increase its productive capacity to 30,000 seedlings a year under a plan to boost national date production. The laboratory produces pineapple and banana seedlings and is carrying out research to propagate other crops.

Livestock

Agriculture Development Centres train stock breeders in the latest practices, implement economic projects and animal care and pass on the latest research to help breeders improve their performance.
The National Livestock Immunisation Project aims to protect animals from epidemics and contagious diseases. In 2000 1,414,037 animals were immunised to eradicate disease and 741,870 animals were treated at the veterinary clinics.

Sustainable development

In 2002, a national strategy was launched to improve natural pastures and ensure sustainable development of Omani livestock. The strategy aims to manage natural grazing land, to balance the supply of land to livestock and limit its use for other purposes.
The integrated approach includes research and surveys on animal resources, conserving high-yield fodder plants, introducing new strains of fodder plants with high nutritive values. New laws on grazing land and livestock management encourage stock breeders to breed animals that produce a better economic return, and persuading farmers to rehabilitate natural pastures in the mountains of Dhofar to support grazing animals.

Fisheries

Fishing is one of the most important non-oil sectors in Oman. The state provides technical and financial support for Omani fishermen, and has introduced research programmes and laws to protect and sustain fish stocks.
The total catch for 2000 stood at 120,000 tonnes, with the traditional fishing sector accounting for 90 percent and commercial fisheries accounting for the remaining 10 percent. Promoting traditional fishing remains a priority and officials have devised a range of programmes and plans to develop and modernise this sector. The Sultanate’s traditional fishing sector comprises 13,256 working fishing boats, employing 29,000 fishermen. In 2000, the Sultanate exported 46,409 tonnes of fish with a value of RO 37.2 million. The Vision of Oman’s Economic Future projected fishing industry growth of 5.6 percent a year to 2020. Conservation and protection measures include restricting the commercial fishing seasons for deep-sea fish and limiting the season for catching species such as lobsters and abalone, which are threatened with extinction through over-fishing. Royal Decree 51/91 established a fund for fisheries research. Since 1991, it has financed and developed 26 projects including a prawn and crustacean farm, an abalone farm, a study of catching methods and prawn stocks in the Gulf of Masirah, and a survey on seaweed in Omani waters. The findings have helped the fishing industry to calculate the sustainability of Omani fish stocks.
The Fisheries Quality Control Centre has helped to train fishing companies in quality control. The Sultanate is on the list of states permitted to export to EU member states.
This has boosted both Omani fishermen and the national economy, with 16 Omani companies exporting Omani fish to EU countries. More than 30 Omani companies export fish from the Sultanate.

Investment and loans

Oman is developing investment in agriculture, livestock and fisheries, issuing soft loans for 34 projects with an investment value of RO 77.7 million. The Sultanate stresses the need for a stable economy to enable the private sector to drive future growth, creating export-oriented industries and developing productive sectors such as agriculture and fisheries.
Royal Decree 17/97 created regulations for subsidising private sector activities in key sectors, and the government offers soft loans through the Omani Development Bank for projects with an investment cost of up to RO 250,000. Companies involved in more costly projects are granted soft loans of up to RO 500,000. The regulations set the upper limit on loans for public joint stock companies at RO 5 million. To encourage investment in agriculture, the government has issued a package of incentives including five-year tax exemption for companies whose main activity is agriculture or agricultural production.

Oman 2002/2003:- Home Geography and History Sultan Qaboos Government Foreign Affairs Defence,Law and Order Key Industries Economic Development Social Development Awqaf & Religious Aff. Heritage,Culture/Media Utilities Oman in figures Oman and The World Oman 2000 Book