Oman has assumed a record high oil price of $58 a barrel in its 2011 budget as the Gulf nation apparently expects a further improvement in crude prices next year because of recovering global economy, according to official data.

The projected price is nearly 16 per cent higher than the $50-a-barrel price forecast by the government in its 2010 budget although this level is one of the highest crude price assumed for a budget in the Gulf region.

Announcing the draft budget for 2011 this week, Oman’s Minister of National Economy Ahmed bin Abdul Nabi Mecki also said the budget would be based on oil production average of close to 900,000 barrels per day, one of the highest levels since the country began pumping crude nearly four decades ago.

As a result, oil earnings were projected a record high level while total revenues were expected to be nearly 14 per cent higher than the 2010 revenue.

“Budgeted revenues are based on an average $58 oil price and production of 896,000 barrels per day, an increase  of nearly 26,000 bpd over the 2010 average output or around three per cent,” Mecki said Oman’s Shura council (appointed parliament) during a budget debate.

He put oil revenue at RO4,956 million, nearly 68 per cent of the total revenue of around RO7,280 while gas earnings were projected at RO920 million. Non-hydrocarbon income was forecast at nearly RO1,404 million, around 19 per cent of the total budgeted revenue for 2011.

Spending is budgeted at RO8,130 million, an increase of about RO696 million over the 2010 budget. This left a deficit of RO850 million, which analysts expect to be sharply cut or wiped out at the end of the year on the grounds crude prices are expected to average higher than the budgeted level through 2011.

In statements last month, Oman’s oil minister Mohammed bin Hamad Al Rumhi said the country has completed development plans to raise output to nearly 900,000 bpd next year, adding it is targeting production of one million bpd in 2012, its highest ever crude output level.

Oman has already boosted its oil production to a nine-year high of 875,000 bpd as the Gulf country is pushing ahead with a $multi-billion expansion programme.

It also pumped nearly 97 million cubic metres a day of natural gas in September, an increase of about seven per cent over the same period of last year.

In 2007, Oman approved an ambitious $10-billion programme to develop its oil and natural gas resources, which are officially estimated at around 4.5 billion barrels and 30 billion cubic metres respectively.

The plan is designed to develop gas deposits and push up oil production to previous levels. 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.

Mecki said the 2011 budget marks the start of the country’s eighth five-year development plan, which targets real GDP growth of five per cent and around six per cent in current prices. Inflation is targeted at an average four per cent.

He said the seventh plan during 2006-2010 performed well despite the 2008 global crisis, adding that average real growth is estimated at around 6.2 per cent and nominal growth at nearly 12.8 per cent.

“Inflation was slashed from a record 12.4 per cent in 2008 to nearly 3.5 per cent at the end of the seventh development plan,” he said. “The plan also recorded surpluses in the current account and the budget against projected deficits…these surpluses were used to bolster the country’s financial reserves and cut debt.”