The government-controlled Petroleum Development Oman (PDO), which manages more than 80 per cent of the country's hydrocarbon sector, said it has completed the first stage of Mabrouk field development.
On March 30, oil began flowing through new facilities built at the field, nearly 23 months after work started in May 2007, it said.
"This is a major achievement in which a new oilfield was developed in record time, on budget and with an excellent safety record," Managing Director John Malcolm said in a statement released by the company.
"When fully completed, the field facilities will make a significant contribution to sustaining Oman's oil and gas production over the years."
The statement said the development plan involves the construction of a major new production station and associated gathering system, the first phase of which has just been completed.
Over the coming years, a total of 76 new wells will be drilled at the field.
The new facility can process 63,000 barrels per day of gross liquids (oil and water) and 2.5 million standard cubic metres a day of gas. The second phase of the Mabrouk project involves the installation of powerful gas compressors capable of sending natural gas produced at the field to the Saih Rawl gas processing plant, where it will enter the Government Gas System.
Phase II is scheduled for completion in early 2010.
Oman has approved a $10 billion (Dh36.7bn) expansion project to expand its oil and gas production and reverse a steady decline over the past few years.
Oil output began recovering in 2008 after nearly six years of a steady decline as the government focused on the development of the gas sector. From around 710,000 barrels per day in 2007, the country's oil production climbed to nearly 756,000 bpd in 2008, an increase of 6.4 per cent.
But the average output last year fell short of the 790,000 bpd target set by the government in its 2008 budget and was far below the peak output of around 900,000 bpd recorded in 2002.
Production has steadily receded during that period, dropping from 328 million barrels in 2002 to 299 million barrels in 2003 and 285 million barrels in 2004.
It reached 283 million barrels in 2005 and 269 million barrels in 2006.
Production dived to 259 million bpd in the year 2007 but the Omani Government said last year that output would recover as it based its 2008 budget on higher oil production.
PDO is 60 per cent owned by the Omani Government, while 34 per cent is held by Shell Group, four per cent by Total and two per cent by Partex.
Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.