Unlike most of its regional peers, Oman is not a member of Opec, the international oil producers’ group, but it has the largest oil reserves of any non-Opec member in the region. The first economically viable oil find in the sultanate was made in 1962 and the first exports were made in 1967.

Today, Oman’s oil reserves are estimated at 5.5 billion barrels by the US’ Energy Information Administration (EIA), while natural gas reserves amount to 30 trillion cubic feet.

Raising output

Most of the country’s oil reserves are found onshore. However, extracting them from the ground has proved challenging and Oman is among the regional leaders in using enhanced oil recovery (EOR) techniques to maintain its output. That has paid off in recent years, with oil production rising from 715,000 barrels a day (b/d) in 2007 to about 891,000 b/d in 2011, according to the UK’s BP, reversing the trend of decline at the beginning of the century.

All of Oman’s key export markets for its oil are located to the east, with the most important including China, South Korea and Japan. State-owned Petroleum Development Oman (PDO) is 60 per cent owned by the government, with the remaining shareholders consisting of UK/Dutch Shell Group (34 per cent), France’s Total (4 per cent) and Portugal’s Partex Oil & Gas Group (2 per cent).

There has also been a steady rise in natural gas production in recent decades to match the rise in crude output. At the turn of the century, Oman was producing 0.5 billion cubic feet a day (cf/d) of natural gas, but by 2011, this had risen to 2.6 billion cf/d.

The sultanate has also been developing its liquefied natural gas (LNG) export capacity and today is the ninth-largest LNG exporter in the world. There are three liquefaction trains, two owned by Oman LNG and one by Qalhat LNG. All three are located on the east coast near Sur, with a total production capacity of 10.4 million tonnes a year.

Both LNG firms are state-owned. The government owns 51 per cent of Oman LNG, with Shell Group holding 30 per cent and smaller stakes held by Total (5.5 per cent), Korea LNG (5 per cent), Mitsubishi Corporation (2.8 per cent), Mitsui & Company (2.8 per cent) and Itochu Corporation (0.9 per cent), all of Japan, and Partex (2 per cent).

The government also directly owns 46.8 per cent of Qalhat LNG, while Oman LNG owns 36.8 per cent and Spain’s Union Fenosa Gas owns 7.4 per cent.

The two most significant customers for Oman’s LNG are located in the Far East. In 2011, Japan accounted for 5.4 billion cubic metres (bcm) of the total export of 10.9 bcm, according to BP. South Korea bought a further 5 bcm, with the remaining going to Taiwan, Spain and India.

Other international oil firms with a local presence include Ireland’s Circle Oil, Thailand’s PTT Exploration & Production, the US’ Hunt Oil Company and Malaysia’s Petronas.