Oman to cut reliance on oil exports, plans to diversify

Oman plans to drastically reduce its reliance on oil exports and double its income from industrial activities in the coming decade as the Gulf strives to diversify away from crude export revenues. The non-Opec oil exporter aims to reduce the contribution of the oil sector to its gross domestic product to nine per cent by 2020 from 41.5 per cent in 2007, according to an official planning document from the Ministry of National Economy. "The economy would no longer be oil-reliant in 2020. It is envisaged to be a diversified economy with higher levels of savings and investment," the document said. Like its neighbours in the world's top oil-exporting region, Oman accumulated large surpluses as oil prices rallied in the six years to mid-2008 and the Sultanate has undertaken swift fiscal expansion since 2002 to diversify its economy. Output from the country's ageing oilfields has been sliding in recent years. It pumps 760,000 barrels per day and says it is targeting output of 800,000 bpd in 2009. The industrial sector's contribution to GDP would rise to 29 per cent in 2020 from 14.3 per cent in 2007, while the service sector – including wholesale and retail trade – would climb to 46.9 per cent from 40.5 per cent. Agriculture and fishing would increase to 5.1 per cent from 1.3 per cent, according to the document. "The sources of national income will be diversified, with the non-oil sector assuming the primary role," the ministry said, adding that the gas sector's contribution would rise to 10 per cent from 3.8 per cent. Oman's GDP in 2008 was RO23.05 billion (Dh219bn) up from RO16.01bn in 2007. The non-oil sector contributed only 15.2 per cent to total growth. Oman posted a 56 per cent drop in net oil revenues in the first three months of 2009. Keep up with the latest business news from the region with the daily Emirates Business 24|7 newsletter. To subscribe to the newsletter, please click here .