Background

Despite being Oman’s biggest oil company, Petroleum Development Oman (PDO) is a minnow compared with its regional neighbours and it is focused on using enhanced oil recovery (EOR) techniques to maintain oil and gas output.

PDO traces its history back to Iraq Petroleum Company (IPC), a consortium of international firms, which in 1937 was granted a 75-year exploration and production concession by then ruler Sultan Said bin Taimur. IPC formed a subsidiary, Petroleum Development (Oman and Dhofar) to oversee operations. It would be 1967 before oil was discovered, at the Natih and Fahud fields, by which point the company had changed its name to Petroleum Development Oman. Eighty five per cent of PDO was owned by UK/Dutch Shell, 10 per cent by Compagnie Francaise des Petroles, the forerunner of today’s Total, and 5 per cent by Portugal’s Partex.

Today, the government owns a 60 per cent stake in the company, Shell has 34 per cent, Total 4 per cent and Partex 2 per cent.

Oil production rose during the 1970s and 1980s, but peaked in the early 1990s, leading PDO to experiment with advanced EOR techniques. Since the early 2000s, the company has achieved a remarkable turnaround, producing near-record volumes of oil in 2011.

PDO continues to be owned and operated by a consortium of shareholders, meaning that it is not technically a national oil company.

Role in Oman’s economy

Oman produced a total of 922,000 barrels of oil a day in 2012, a volume dwarfed by most of its Gulf neighbours. PDO produced about 70 per cent of that amount. In 2012, 88.2 per cent of government revenues came from oil and gas exports, according to the Washington-based IMF, while the hydrocarbons sector accounted for 42 per cent of gross domestic product. With
government jobs accounting for about 80 per cent of all national employment, and oil and gas the chief source of government revenues, the sector – and by extension PDO – continues to be a vital part of the sultanate’s economy.

Role in the global economy

PDO is a relatively small oil producer, and the oil pumped by the company is not the sweet and light oil found in other parts of the region, making it a less valuable commodity on the international market.

Strategy

PDO has about $10bn of projects in the pipeline between now and 2022, planned to increase the reserves of oil available to the company. During that period, the proportion of oil produced by PDO using EOR techniques will rise from about 3 per cent to more than a quarter of all oil. The company is currently promoting the use of solar power to provide energy for its Amal West EOR scheme.

Subsidiaries

PDO is solely focused on oil and gas production and has a single horizontal operational structure.