Oman Hydrocarbon Sector
Sources: The Library of Congress Country Studies; CIA World Factbook
Figure 14. Oman: Oil Fields, Gas Fields, and Refineries, 1993
Since the first commercial field was discovered at Jibal, west of Adam, in 1962, the petroleum industry has dominated the economy. In 1991 the industry contributed about 43 percent of GDP and 82 percent of government revenues. The government's heavy reliance on crude oil export earnings to maintain its income distribution system and political stability made continued development of this sector a priority.
By early 1977, the newly organized Ministry of Petroleum, Fisheries, and Agriculture prematurely assumed that production had probably peaked at more than 350,000 barrels per day (bpd-- see Glossary) and would decline. Exploration activity in the south was insignificant, deterred by political instability in the region, and production at the main fields of Petroleum Development Oman (PDO) in the north, including Jibal, was in decline (see fig. 14). The suppression of the Dhofar rebellion in the mid-1970s helped reverse an output decline. Foreign exploration companies, satisfied with the restoration of political stability, began to sign area exploration and production agreements with the government. Enhanced oil recovery (EOR) techniques at existing fields, combined with new fields coming onstream, raised average output to 708,000 bpd in 1991.
The principal problem the government faced in the early 1990s was a diminishing reserve base. Proven reserves were estimated at 4.6 billion barrels in 1992, small in comparison with other gulf states. At the mid-1992 rate of production of 725,000 bpd, Oman's crude reserves are sufficient to permit seventeen years of output, compared with nearly 350 years for Saudi Arabia.
Oil prospecting began in 1924 when the Anglo-Persian Oil Company (later renamed British Petroleum) obtained a concession; however, unsuccessful exploratory drilling discouraged further interest. Discoveries in Bahrain and Saudi Arabia during the 1930s stimulated exploration activity. The first concession agreement was signed with Petroleum Concessions, a Western consortium formed by the owners of the Iraq Petroleum Company (IPC). In 1951 the concessionaire's name was changed to Petroleum Development Oman (PDO). In 1993 PDO remained the principal operating company and controlled the bulk of oil reserves and output.
After several years of costly and unsuccessful exploratory drilling, most IPC partners wanted to withdraw from their concession area. In 1960 Royal Dutch Shell acquired an 85 percent interest in PDO; Participations and Explorations (Partex) held the remaining 15 percent share. In 1967 the French firm TotalCompagnie Française des Pétroles acquired 10 percent of Partex's 15 percent interest. In December 1973, the government of Oman, following the participation agreements negotiated by several gulf countries, acquired a 25 percent share of PDO. In July 1974, the government's stake was raised to 60 percent, retroactive to January 1, 1974. Since 1974 the remaining 40 percent has been held by Royal Dutch Shell with 34 percent, Total-Compagnie Française des Pétroles with 4 percent, and Partex with 2 percent.
PDO operates two main production areas: a group of northern oil fields, including Jibal, Fuhud, and Sayh Nuhaydah, that produce lighter grades of crude oil; and a group of southern fields, including Rima, Mamul, Amal, Nimr, Mukhaizna, and Sayyala, that produce heavier crudes. Development of the southern fields was contingent on the suppression of the Dhofar rebellion and the reestablishment of political stability in the sultanate.
Data as of January 1993
NOTE: The information regarding Oman on this page is re-published from The Library of Congress Country Studies and the CIA World Factbook. No claims are made regarding the accuracy of Oman Hydrocarbon Sector information contained here. All suggestions for corrections of any errors about Oman Hydrocarbon Sector should be addressed to the Library of Congress and the CIA.