Oman Projects at a glance
With about $177bn of projects planned or underway, Oman has a substantial pipeline of projects as Muscat seeks to diversify Oman's economy into logistics, tourism and manufacturing, while improving public services and infrastructure.
Out now, Oman Projects 2018 provides a comprehensive assessment of the outlook for Oman's projects market in 2018 and beyond. The latest premium market report from MEED provides an invaluable guide to the opportunities and challenges facing the sultanate's projects market.
[caption id="attachment_294280" align="aligncenter" width="219"] Out Now: Oman Projects 2018 provides an invaluable guide to the opportunities and challenges in Oman’s projects market[/caption]
Oman’s economy remains heavily reliant on hydrocarbon revenues, although their contribution to GDP has been shrinking.
Oil and gas activity accounted for 45 per cent of the sultanate’s GDP in 2014. But the hydrocarbons contribution fell to about 34 per cent of GDP in 2015, and to about 27 per cent in 2016, due to the fall in oil prices.
The country’s oil and gas reserves are nearing exhaustion, with oil reserves expected to last less than 15 years at current production levels, and gas just under 20 years.
Muscat is targeting downstream industrialisation, investment in transportation and logistics, and tourism as the principle means of diversifying the Omani economy. These in turn, are the main drivers of project activity. In 2017, Muscat’s diversification drive was boosted by the award of contracts worth $5.7bn on the giant Duqm refinery project.
These underpinned a 31 per cent year-on-year jump in the value of projects awarded in Oman, and saw the country emerge as the region’s third biggest and fastest-growing projects market in 2017. The development of a regional manufacturing and logistics hub in Duqm will continue to drive project activity in Oman in 2018.
But despite a strong 2017, Oman faces many challenges. Muscat faces the tricky task of balancing the requirement to diversify with the need to ensure its budget deficit does not get out of hand.
The total value of projects planned in Oman, but yet-to-be awarded at the start of 2018, was about $126bn. This suggests that spending levels could remain relatively high in the coming years, although not all projects are likely to succeed or be awarded on schedule.
Whether Muscat is able or willing to move ahead with all of its plans remains in doubt. Some major schemes, such as the national rail network, have been on hold for several years, with little sign they will be revived soon. On the other hand, the development of industrial facilities in Sohar, Duqm and some other sites continues to move forward.
Oman’s projects market is dominated by government ministries or other state-linked bodies. Among the most active is the Transport & Communications Ministry, which is responsible for the sultanate’s roads and airports expansion programmes.
However, the government is keen for the private sector to play a greater role in project development over the coming decade.
Transport and logistics
- Investment in highways is the cornerstone of Muscat’s drive to improve access to remote regions of the country in order to stimulate economic activity. While the long-planned ambition to establish a national rail network will significantly boost Oman’s projects market if it goes ahead.
- Oman’s building sector traditionally has been dominated by tourism developments. Large private-sector real estate schemes are relatively rare compared to other Gulf markets. This segment of the projects market is coming under pressure from the weakening economy.
- Petrochemicals and gas projects will play a more substantial role in the future, due to world-scale chemical plants planned in Salalah, Duqm and Sohar, in addition to BP’s massive Khazzan tight gas project, which began production in September 2017.
- The boost to gas supplies from the development of the Khazzan field is an important strategic project for the Omani economy, which has been facing a shortage of gas supplies to fuel its downstream industrial ambitions. Further targeting of difficult-to-extract oil and gas will become an increasingly important aspect of the projects market in the future.
Oil & gas
- Some $30bn-worth of oil and gas project contracts could be awarded between 2018 and 2023. Many of the schemes are fairly small in nature, but among the larger ones are the $10bn Northern and Central Industrial Zone at Duqm planned by the Duqm Special Economic Zone Authority, which is currently at the design stage and includes a refinery and other elements.
Power & water
- Demand for electricity is rising at about 7.5 per cent a year from Oman’s Main Interconnected System (MIS), and water demand is rising at about 5 per cent a year. A significant focus of future project activity will be the need for further expansion of wastewater networks and the construction of new electricity generating plants to keep supply ahead of demand.
This article is an excerpt from Oman Projects 2018, the latest premium market intelligence report from MEED.
Out now, Oman Projects 2018 provides an invaluable guide to the opportunities and challenges in Oman’s projects market in 2018.
Click here to find out more about Oman Projects 2018, or to order your copy now.
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