Oman oil output soars despite lower capital

Oman boosted its oil production by over 60,000 barrels per day to one of its highest levels in the first seven months of 2010 despite a 19 per cent cut in investments in the sector, according to official figures.

From 797,000 bpd in the first seven months of 2009, the Gulf country’s crude output jumped to 858,000 bpd in the first seven months of 2010, an increase of 61,000 bpd, the Ministry of National Economy said in its monthly report.

Gas production also increased to around 674 billion cubic from 620 million cubic feet in the same period, the report showed.

Oil and gas output increased despite a decline in investment in both sectors following a steady rise in capital in the previous years.

From about RO358.6 million (Dh3.5 billion) in the first seven months of 2009, capital spending in the crude oil sector plunged by around 19.6 per cent to RO290.6 million (Dh2.8 billion) in the first seven months of 2010.

Investments in the gas sector were cut by about 16.3 per cent from RO156.1 million (Dh1.5 billion) to nearly RO130.7 million (Dh1.25 billion).

The surge in crude output is in line with Oman’s budget targets and is a result of a massive investment programme launched by the non-OPEC nation to reverse a steady fall in its oil production due to lower field recovery rates.

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.

Official data showed Oman pumped around RO655.7 million (Dh6.2 billion) in its oil sector and RO295.9 million (Dh2.8 billion) in the gas sector in 2009.

The surge in oil production allied with a sharp rise in crude prices to boost Oman’s oil export earnings by nearly 954 per cent to RO2.84 billion (Dh27.3 billion) in the first seven months of 2010 from about RO1.84 billion (Dh17.6 billion) in the first seven months of 2009, according to the Ministry of Economy.
Gas revenues also swelled by nearly 21.7 per cent to RO445.7 million (Dh4.27 billion) from RO366.1 million (Dh3.5 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 64.4 million barrels (304,000 bpd) in the first seven months of 2010.

Japan came second, importing around 21.8 million barrels (103,000 bpd), followed by Thailand, with imports of about 21.07 million barrels (100,000 bpd).

The report showed South Korea, which had been one of the largest buyers of Omani oil, slashed its crude imports from the Gulf country by nearly 53.9 per cent to 6.9 million barrels (32,800 bpd) in the first seven months of 2010. It gave no reason for the decline but showed there was a large increase in the oil imports by Japan, China, and Singapore during that period.
 

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