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29 March 2024

Oman pursues drive to boost oil output

Oman boosted its oil production to one of its highest levels in May as the Gulf country is pushing ahead with a massive investment drive to maximize output and fund its soaring budget, official figures showed Sunday. (REUTERS)

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By Nadim Kawach

Oman boosted its oil production to one of its highest levels in May as the Gulf country is pushing ahead with a massive investment drive to maximize output and fund its soaring budget, official figures showed Sunday.

From around 853,000 barrels per day in April, the country’s crude production climbed to nearly 876,900 bpd in May, the highest average output since 2002, when supplies hit an all time high of nearly 900,000 bpd.

Figures by the Omani Ministry of Economy showed average oil production in the first five months of 2010 swelled by around 70,000 bpd to 859,000 bpd from nearly 789,000 bpd in the first five months of 2009.

“Oman’s average oil production increased by about 8.8 per cent in the first five months of this year over the same period of 2009,” the report said.

In 2007, Oman approved an ambitious $10-billion programme to develop its oil and natural gas resources, which are officially estimated at around five billion barrels and 30 million cubic metres respectively.

The plan is designed to develop gas deposits and push up oil production to previous levels after a steady decline over the previous years.

Production began recovering in 2008, when it grew by nearly 6.5 per cent to 756,000 bpd from 710,000 bpd in 2007.

But the output was short of the 790,000 bpd target set by the government in its 2008 budget and was far below the record high output of around 900,000 bpd recorded in 2002.

The increase in the first five months of 2010 extends a steady rise over the past three years following a steep decline in crude output in previous years because of a surge in investment in the gas industry at the expense of oil fields.

Oman is the only Gulf country that has not cut its oil output as it is not a member of the 12-nation Organization of Petroleum Exporting Countries (OPEC). Neighbouring UAE, Saudi Arabia and Kuwait have slashed crude supply by at least 1.5 million bpd in line with an OPEC accord to keep prices firm.

The Ministry’s figures showed Oman pumped around RO655.7 million (Dh6.2 billion) in its oil sector in 2009 and nearly RO195 million (Dh1.87 billion) in the first four months of 2010. Gas investments were put at about RO295.9 million (Dh2.8 billion) and RO74.3 million (Dh710 million) in the same period.

The surge in oil production allied with a sharp rise in crude prices to boost Oman’s oil export earnings by nearly 99 per cent to RO1.988 billion (Dh19 billion) in the first four months of 2010 from about RO999 million (Dh9.6 billion) in the first four months of 2009, according to the Ministry of Economy.

Gas revenues also swelled by nearly 11.7 per cent to RO304.1 million (Dh2.9 billion) from RO272.3 million (Dh2.6 billion).

Buoyed by stronger oil prices, Oman early this year joined other Gulf crude producers in announcing a record high budget with an ongoing fiscal stimulus to cushion the effects of the 2008 global fiscal turbulence.

The 2010 budget was based on a more optimistic oil price of $50 a barrel compared with $45 in 2009, according to Omani Minister of National Economy, Ahmed Mecki, who put spending at RO7,180 million (Dh68.9 billion), nearly nine per cent above the 2009 record budget.

The report showed China was the top importer of Omani oil, receiving around 41.6 million barrels (277,000 bpd) in the first five months of 2010.

Thailand came second, with around 17.19 million barrels (114,000 bpd), followed by Japan, which received nearly 16.4 million barrels (109,000 bpd) in the first five months of 2010, far higher than its imports of 10.5 million barrels (70,000 bpd) in the first five months of 2009.

Other key buyers were South Korea, Taiwan, Malaysia and Singapore.