Oman 4 – full report

Oman, a land of myth and legend. Ancient trails of Frankincense, unspoiled beaches, grand canyons and genuine smiles. Fascinating blend of old and new. This is a journey into the present and the future of a nation, that has a natural sense for moderation and elegance. The Sultanate of Oman occupies a vital strategic location, which has always been a major factor in determining its politics, options and approach to a wide range of issues and developments. The Sultanate of Oman has a rich and varied history. From the ancient Frankincense traders, to the export of pure-bred Arab stallions, as recorded by Marco Polo in the 13th century.

Situated as it is at a crossroads linking Asia, Africa and Europe, the Sultanate of Oman has been a center of trade, commerce and cultural exchange since antiquity. Surrounded by the waters of the Gulf of Oman and the Arabian Sea, in times past, Oman served as one of the key gateways to the Arabian Peninsula.

Located on the western flank of the entrance to the narrow Straits of Hormuz, the entrance to the Persian Gulf and the world’s most important thoroughfare when it comes to the transport of oil and natural gas, modern-day Oman is no less a country of geopolitical and economic significance. Covering some 309,500 square kilometers of mountain, desert and coastline at the southeastern tip of the Arabian Peninsula, to the north and west Oman borders fellow Gulf Cooperation Council member states the United Arab Emirates and the Kingdom of Saudi Arabia. To the southwest lies the Republic of Yemen.

Oman today has a fast-growing population of more than 3 million; more than 70% of whom live in urban areas.

Friendly relations between Oman and the U.S. stretch back a long ways. It was during George Washington’s presidency, in 1790, that the first American ship, the Rambler, arrived at the Omani capital of Muscat.

In 1834, that Oman and the U.S. signed their first treaty, establishing friendly diplomatic and trade relations that carry on to this day. It was during this period that Oman maintained a naval fleet considered one of the most powerful in history.

Fast forward to the 20th century and the reign of His Majesty Sultan Qaboos bin Said Al-Said, who has governed Oman since 1970 as both head of government and Chief of State.
Oman’s last Consultative Assembly election was held on October 15, 2011. Some 520,000 Omanis were reported to have registered for the election, an increase of 388,000 from the previous election in 2007. Some 1,300 candidates stood for election, 77 of whom were women, the greatest number to date.

Crafting and implementing a series of five-year national strategic development plans over the past four decades, Oman’s economy has expanded every year but four – 1978, 1987, 1990, and 1999. Regaining momentum since being thrown off course by the banking crisis and global recession of 2009, Oman’s GDP rose 4% in 2010 and 5.5% in 2011.
Real GDP gained steam in 2012, increasing an additional 8.3% in 2012, according to Finance Minister Darwish al-Balushi.

Development and growth have posed challenges, however. Sultan Qaboos in spring 2011 announced plans to grant the bicameral legislature greater powers, establishing an ad-hoc committee to amend the country’s basic law to reflect this.

Offering a more broad-based assessment of socioeconomic conditions and the quality of life, Oman scored 0.705 according to the UN Development Program’s Human Development Indicators 2011 report, 90th of a total 187 countries for which a wide range of comparable data are compiled, higher than the 0.641 average HDI score for the Arab States region.

As summarized in the BTI 2012 Oman report, “Oman’s eighth five-year plan (2011 – 2015), presented in November 2010, concentrates on economic diversification, the creation of jobs for Omanis, the encouragement of foreign investment and an expansion of the private sector’s role as the key components of the move toward a post-oil economy.

State-run and sponsored oil and gas companies and investments are the major players in the Omani economy and have driven the course of the country’s socioeconomic development.

Continuing efforts to support and encourage international investment in the oil and gas sector, Oman’s Ministry of Oil and Gas in 2009 signed production-sharing agreements with four international oil companies. As of year-end 2009, 22 companies were involved in oil and gas exploration and production across 32 concession areas, employing and training Omanis, making use of local resources, and contributing to local communities and the country’s social and economic development.

The oil and gas sector in Oman is open to all international companies. We currently have more than 18 companies from all over the world. Normally we have a tendering process. Whenever there is a new block open in the oil and gas sector, we tender it and then the companies compete. Everyone submits its proposal, and based on the terms that they submit, the best proposal, we allocate that block. So there are really no preconditions, no restrictions, and no limitations.

According to the U.S. Energy Information Administration, Occidental Petroleum has the largest presence of any foreign firm and is the second largest oil-producer in Oman. Other major players include Shell, Total, Partex, BP, CNPC, KoGas, and Repsol.

Crude oil production in Oman is increasingly reliant on Enhanced Oil Recovery techniques and technology, a field in which Oman is considered a regional pioneer.

Having launched a nationwide EOR program in 2002, completion of the Harweel Enhanced Oil Recovery project is expected to add around 30,000 bpd to Oman’s crude oil production in 2012.

Oman is a small producer in the international market. We produce about 930,000 barrels a day of crude, and we produce about 100 million cubic meter of gas daily. There is an increasing demand for oil and gas, and especially for gas, because we became now the preferred source of energy, because it is clean energy. And we find that increase demand locally because we are also having a limited reserve, so far we have not been able to allocate all the gas demand that has been asked for.

Our priority is to fulfill the commitment, which has been signed in the past. We are working hard of course, in the exploration front, and that is why we attract international investors and international companies, with new technologies, new knowhow, because also with time technology improves. And the reserve, which used to be very difficult to extract and produce will become accessible, and you can produce it economically and feasibly. That’s what we have seen so far. We are developing many fields, in the oil and gas, especially gas, maybe the demand is higher, especially locally for gas, and we have made so many successes in this area.

US companies are already working in Oman now, and playing an important role in the current time. The sector, as I said, it is open, and we welcome the American companies to come, and invest, and introduce themselves to the oil and gas sector in Oman. There are a lot of opportunities. We spend on an annually basis about ten billion dollars in the upstream only. There is a scope for any new technologies, and we welcome it because at the end of the day we look to improve efficiency and productivity of the sector. I think there are a lot of new technologies which apply in the States that can be transferred and applied in Oman as well.

Developing private sector industry and commerce is an important feature of Oman’s long-term development strategy, ranking second only to oil and gas as the most important segment of the national economy. By 2020, Oman’s industrial sector is expected to contribute 15% to national gross domestic product, up from 3.5% in 1992.

Import substitution was the main aim of the Omani government’s industrial development strategy during the 1970s and 1980s. That shifted in the 1990s toward encouraging development of exports for the GCC market.

Developing a healthy, capable private sector and creating an environment conducive to foreign investment are seen as key facets of realizing this goal.
Foreign direct investment in Oman’s industrial sector rose to exceed RO 5 billion (~USD 13 billion) as of year-end 2009, an increase of 128.7% from 2006.

Oman has grown in the past 40 years under the leadership of His Majesty the Sultan of Oman, and it is still continuing to develop, they are basically building roads, developing highways, buildings, and bringing new industries into the country, and creating an atmosphere for foreign investment. It is a beautiful place. The sea, the mountains, the desert makes a beautiful setup for living, for bringing the children up in this area. So it is quite a bit an opportunity for people to come.

Construction of industrial estates has been a core aspect of implementing Oman’s industrial development strategy. Completed in the mid-1980s, the first, Ar Rusayl 15 kilometers from As Sib International Airport, is home to some 60 enterprises, a wide variety of manufacturing companies that produce everything from soap and crackers to cement and copper cathodes.

On a smaller scale, the Omani government is also studying the feasibility of establishing cottage industries that would produce traditional items such as pottery, rose water, and frankincense.

The security, stability, education for the children, they are all available, and that is what most people think of when they go to another place to live.

The Omani government, in line with its intention to further develop and diversify the country’s economic base, in December 1999 launched an initiative to restructure and privatize its electricity and water sectors. Guided by policies and regulated by the Authority for Electricity Regulation, young, independent power and water companies spun off from the Ministry of Housing, Electricity and Water are now focused on developing new markets for electricity and water, as well as looking to change the composition of the power sector’s generation mix.

The law was for the regulation and privatization. So it did map out the future privatization of the sector. But, as of now, the only segment within the overall electricity sector, which has been privatized, is the generation sector.

So the benefits that we see within the generation sector, specifically with inclusion of international participants is exceptional. The interest, the quality of operation once the plans get commissioned, the competitiveness that we get and analyze, the transfer of technical knowhow to the local participants, is working exceptionally well. And we hope that these benefits that the government sees from the privatization of the generation sector is then going to flow into the privatization of the rest of the electricity sector. So privatization and its benefits are now only zoned in to generation sector, but the law did enable and facilitate the privatization to then occur in other segments of the electricity market.

Power demand peaks in summer, having reached 2,614 MW in 2006 and 2,773 MW in 2007. The residential sector typically consumes more than half of Oman’s total annual energy production. Energy consumption in the industrial sector is the fastest growing, however, registering an annual growth rate of 14.4 % in comparison to non-industrial sectors, which have grown at a 6.3% rate in recent years.

So the power and water and procurement company, which is the licensee, has the statutory responsibility to ensure that there is enough capacity to meet demand. And how do they go about it? They go about it by issuing a seven-year statement. And what the seven-year statement does, they have an obligation as per the license to submit it to us as the authority for its approval, it list their forecasts, based on security of supply analysis, and probabilistic planning mechanism…where they ensure that there is, what will be the forecast for the next seven years. There is rapid growth in Oman, I mean, this year and for the coming years, we have seen double digit growth. Means that there will be a continuous need for capacity. So that responsibility has been given to the power and water procurement company. Which is one of the entities that we regulate. So through the law, through the license, we have an obligation to ensure that there is enough capacity to meet the rapidly increasing growth.

Wholly reliant on fossil fuel resources – primarily natural gas – to generate electrical power, Oman is increasingly looking toward development of renewable energy in order meet current and future challenges.

So 100% of our energy generated at this point in time, is from gas. But in the rural areas it’s been generated by diesel generation. So we have a completely undiversified portfolio and the risks of that are well known, so we need to have a diversified fuel mix. And renewal energy is becoming factoring more and more prominently in our planning. And the authority recently has approved a policy where by renewable energy must be taken into consideration by the rural areas electricity company, and any new project that it undertakes in the rural areas. We did publish a study in 2008 which said that there are fast resources for both solar and wind in Oman. What we are doing now, within our jurisdiction, as the authority for electricity regulation is ensuring that, within small scale projects, they need to integrate renewable. But within the large scale there needs to be an overall energy policy, and renewable energy must be within that policy.

Developing its renewable energy resource potential figures to play an increasingly important role in Oman’s strategic development. Oman enjoys sunny weather throughout the year, as well as seasonal monsoon winds; conditions that Oman’s government recognizes can be used to generate clean, renewable electrical power that can be used across society, including in isolated rural areas and to desalinate seawater.

We have been using renewables now on a trial basis to supply some of our energy needs. Like we have now started a pilot to produce steam from solar, which is maybe unique in this area. It has been successful so far. We are trying to widen the application of this project, to other areas in our operation. So we look at it positively and we encourage it also. Even though it is not under the domain of our Ministry. But in our operation we are trying to encourage companies to use renewables for their own operation.

There can be companies from the US, contacting the rural areas electricity company. And providing them with solutions for these small areas, where they can actually submit bets for these small scale projects. Which probably would interest the rural areas company and they can take that into consideration and work to implement these small projects. There’s a huge amount of investment that we have approved, but we do realize that it has to meet the technical capabilities of these companies. Companies such as the ones we have currently in our sector, they can use the international experience where companies with the technical knowhow from the US in supplying the distribution can actually tie up as a technology sharing type of arrangement with these companies where they can tie up and ensure that these companies have the assistance as and when needed for a rapidly growing network.

A civilization exceeds 3.000 years. Under and above ground yet to be explored. Sohar is the city of Sinbad and Ahmed bin Majid, explorers and businessmen. Sohar has the ingredients of nature: sea, bays, valleys and mountains. It is 200 km from Muscat and Dubai. Suntan, fishing, mountains and palm trees climbing, golfing, bowling, Nordic walking and more are awaiting for you. So does electricity at your disposal around the clock. Should you wish to have a traditional Omani wedding ceremony, for new or re-new? Hotels will provide.
Oman’s world-class electricity provider, Majan Electricity, supplies electrical power to government facilities, private residences, and businesses. Majan Electricity is well known for its international standards, security and reliability, highly trained employees, attractive costs, support for renewable energy, demand side management, environment and strong commitment to corporate social responsibility programs. In May 2013, Majan Electricity opened its state-of-the-art green building headquarters in Sohar, one of the fastest-growing industrial hubs and tourism destinations in the Middle East. With its cutting-edge port and high quality of life, free zone, Sohar is a key driver of the Omani economy. As more and more local and international investors and companies set up operations in Sohar.
Sohar is set up for your investment and visit. Welcome to Sohar.

Since His Majesty Sultan Qaboos bin Said first came to power in 1970 his mission has been well defined: to set Oman and its people on the way to progress and prosperity. For the past 4 decades Oman has emerged as a viable, vital 21st century state. With foresight and dedication, the Sultanate has become an important player within the Gulf region and the wider world beyond.
Today, Oman is criss-crossed by multi-lane highways, which ensure that the country is fully accessible- both physically and technologically – to the rest of the world.
While decades ago, Oman was totally dependent on the revenues from its oil and the expertise of foreign labor, today it has achieved enviable success in its aims towards diversification and Omanisation.
The firm principles on which such developments were made, under the wise leadership of Sultan Qaboos, are destined to continue into the future and with them Oman’s stature in the international community as a positive force for peace and progress at home and abroad.


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