Hydrocarbon contribution to Sultanate’s GDP declines

30/06/2015 04:17 AST

The contribution of hydrocarbon sector to the Sultanate’s GDP has been showing a declining trend for the last few years with the lowest being in 2014.

“The decline in the crude oil prices in the global market that was not accompanied by a significant increase in crude oil and gas production in Oman during 2014, could explain the reduction in the contribution of this sector to the aggregate GDP”, says the Central Bank Oman in its annual report.

The hydrocarbon sector accounted for 47.2 per cent of the nominal GDP in 2014 compared with 50.6 per cent in 2013 and 52.3 per cent in 2012.

“Though there is a declining trend in the share of hydrocarbon sector in the economic activities in the last few years, it has remained the dominant economic sector in Oman”, stresses the report which was released yesterday.

The average price for the Omani crude witnessed a decline by 2.2 per cent to $103.23 per barrel in 2014 from $105.51 per barrel in 2013, while production rose slightly to a daily average of 943.5 thousand barrels during 2014.

On an aggregate basis, oil production rose by 0.2 per cent to 344.4 million barrels in 2014 from 343.8 million barrels in the previous year.

According to the report, the production of natural gas, on the other hand, registered a decline of 3.6 per cent to 37,687 million cubic meters during the same year.

At the same time, oil and gas revenues as a percentage of GDP stood at 37.8 per cent in 2014 and accounted for 84.3 per cent of government revenues and about 65.5 per cent of total merchandise exports including re- exports during the year.

“The Government of Oman continued to pursue a developmental and economic diversification policy in 2014 wherein more and more hydrocarbon resources were being utilized to develop value- added hydrocarbon-based industries in the country, including petrochemical and energy-intensive industries”, the report points out. Major oil companies in Oman continued to invest in research and development for new technologies with the objectives of enhancing oil production from challenging geological formations and complex reservoirs as well as trying to minimize production costs.

With lower output per well and less accessible reservoirs, the Sultanate is deploying capital-intensive Enhanced Oil Recovery (EOR) techniques.

“The Omani oil sector started to benefit from these innovations in 2008 when declining production trend was reversed after seven years. These efforts continued to bear fruit as validated by the 0.2 per cent increase in oil production in 2014”, the report adds.

The year 2014 witnessed an increase of 0.2 per cent in crude oil production over the previous year which works out to a daily average of 943.5 thousand barrels. This increase reflected in most part the increase in output from Occidental Oman, CC Energy and Daleel Petroleum Company.

Petroleum Development Oman (PDO) continued to remain the largest petroleum company in Oman in 2014. Its daily average oil production stood at 570.5 thousand barrels compared to a slightly lower production level of 569.7 thousand barrels in 2013.

The quantity of oil produced by PDO in 2014 was well above the company’s long-term target of 550 thousand barrels per day. The company continued to maximize recovery from conventional oil and gas fields and to enhance exploration from unconventional opportunities. In 2014, the success shown by PDO in recent years continued for the seventh consecutive year as the Company’s combined production of oil, gas, liquid petroleum gases and condensates stood at 1.23 million barrels of oil equivalent per day, the third highest in PDO history.

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Oman Daily Observer