MOVING IN THE RIGHT DIRECTION
Historically Omanis are seafarers and traders who dominated regional commodity trading in the Indian Ocean, East Africa, and the Arabian Gulf. There was therefore a succession of migrations which saw the growth of settlements along some parts of the East African coast. Prior to the coming on stream of oil in 1964, the country was dependent on the agricultural sector and on fishing activities.
Head of State His Majesty Sultan Qaboos bin Said (since 1970) has strived to modernize Oman and oil revenues have given him the opportunity to develop a modern infrastructure of roads, ports and airports, as well as telecommunications and broadcasting systems. However, it is believed oil reserves will be exhausted one day and country is therefore diversifying its economy, especially in the field of tourism.
ECONOMY
Today, oil and gas fuel Oman’s economy, and revenues from petroleum products have enabled the country’s dramatic development over the past 36 years. Oil was first discovered in the interior near Fahud in the western desert in 1964. Petroleum Development (Oman) Ltd. (PDO) began production in August 1967. The Omani Government owns 60% of PDO, and foreign interests own 40% (Royal Dutch Shell owns 34%; the remaining 6% is owned by Compagnie Francaise des Petroles [Total] and Partex). In 1976, Oman’s oil production rose to 366,000 barrels per day (b/d) but declined gradually to about 285,000 b/d in late 1980 due to the depletion of recoverable reserves.
PDO which produces around 89% of the Sultanate’s crude and oil condensates and the other oil companies are moving ahead with their plans and efforts to increase oil production capacity and offset the relative decline in productivity the country has bgeen witnessing since 2002. In 2005 average daily production totaled 774,800 barrels, including 66,300 barrels of oil condensates. Production has increased modestly since Occidental began producing from the Mukhaiznah field in September 2005.
Around 718,100 barrels of oil per day were exported in 2005. Most of it (32.2%) went to China, while the remainder was exported to Thailand (16.8%), Japan (16.4%) and South Korea (15%). The Oman Oil Refinery Company received around 86,000 barrels per day to be refined for local consumption, while the surplus was exported. The Sultanate has crude oil and oil condensates reserves totaling over 4,803 million barrels, with PDO’s reserves accounting for over 92% of this figure.
Agriculture and fishing are the traditional way of life in Oman. Dates, grown extensively make up most of the country’s agricultural exports. Coconut palms, wheat, and bananas also are grown, and cattle are raised in Dhofar. Other areas grow cereals and forage crops. Poultry production is steadily rising. Fish and shellfish exports totaled $104.7 million in 2006.
The government is undertaking many development projects to modernize the economy, improve the standard of living, and become a more active player in the global marketplace. Oman became a member of the World Trade Organization in October 2000, and continues to amend its financial and commercial practices to conform to international standards. Oman signed a Free Trade Agreement with the United States in January 2006, and continues to pursue, through the Gulf Cooperation Council, free trade agreements with a number of other key trading partners, including the EU and India.
The Omani Government embarked on its seventh 5-year plan in 2006. In its efforts to reduce its dependence on oil and expatriate labour, the government projects significant increases in spending on industrial and tourism-related projects to foster income diversification, job creation for Omanis in the private sector, and development of Oman’s interior. The government is giving greater emphasis to «Omanization» of the labour force, particularly in banking, hotels, and municipally sponsored shops benefiting from government subsidies. Currently, efforts are underway to liberalise investment opportunities in order to attract foreign capital.
