Oman - Country Commercial Guide
Oil & Gas

This is a best prospect industry sector for this country.  Includes a market overview and trade data.

Last published date: 2021-10-24


Oil has been the driving force of the Omani economy since Oman began commercial production in 1967. The oil industry supports Oman’s modern and expansive infrastructure, including electric utilities, roads, public education, and medical services.

Oman is capable of producing upwards of one million barrels per day of crude oil and condensates, but as party to the OPEC+ pact, it honors OPEC oil production cuts. Oman’s oil reserves primarily consist of heavy crude, and China is the predominant export market. Oman’s government derives roughly 70 percent of its annual budget from oil and gas revenues through taxation and joint ownership of some of the most productive fields, and the industry accounts for 30 percent of Oman’s gross domestic product.

The 2020 oil price crash hit the sector hard, but it is recovering. Oman’s 2021 government budget factored in government revenues of OMR 8.64 billion (USD 22.4 billion), based on average oil prices of USD 45 per barrel, with oil and gas accounting for 41 and 21.6 percent of total revenue, respectively.

The Ministry of Energy and Minerals coordinates the government’s role in Oman’s hydrocarbon sectors. State-owned Petroleum Development Oman (PDO) holds most of Oman’s oil reserves and is Oman’s largest oil and gas operator. U.S. firm Occidental Petroleum is the second–largest operator after PDO and has the largest presence of any foreign firm in Oman. In 2019 Oman created a state energy company, OQ, integrating several government-owned upstream, midstream, and downstream oil and gas entities. The OQ group has participating interests in four producing blocks, one non-producing block, and five exploration blocks, both onshore and offshore Oman. In December 2020, Oman created Energy Development Oman (EDO) to represent the government’s stake in PDO and raise financing for projects. 

In April 2020, PDO directed oilfield contractors to implement 30-percent cost reductions in their original contract values, a move that has resulted in a wave of job losses and pay cuts in the oilfield services industry. PDO is investing heavily in alternative energy by using solar power to generate steam for enhanced oil recovery, which also helps maintain production of crude oil in its mature and geologically complex oil fields. PDO continues to ramp up its In Country Value (ICV) strategy to generate job and training opportunities for Omani nationals and to promote Omani SMEs.

Oman also has natural gas reserves that may play a leading role in fueling industrial growth in the coming years. In 2017, BP announced the production of the first gas from its concession at Khazzan, a tight, sour field. In 2018, PDO announced the discovery of a tight gas field on its own concession with estimated recoverable reserves of more than four trillion cubic feet and 112 million barrels of condensate.  BP is currently producing around 1.5 billion cubic feet per day of June 2021, from Khazzan, which began production in 2017, and Ghazeer, which started up in 2020.

Further downstream, Oman is making a push towards manufacturing and value-added processing through refining and petrochemicals projects such as the completed Sohar Refinery Improvement Project, and the USD 7 billion OQ8 refinery in Duqm, which, when completed in 2022, will be the largest industrial investment in the country. The USD 10 billion Duqm petrochemical complex project is on hold.

Leading Sub-Sectors

The following are some of the leading sub-sectors in Oman’s oil and gas sector:  drills and drilling services, hydraulic fracturing (“fracking”) technology and services, refinery equipment, oil extracting equipment, sand removal devices for crude oil, boilers, drilling rods, separators, burners in mobile tanks, pipeline heating for heavy crude, water treatment systems, quality inspection, steam injection, and other enhanced oil recovery technologies. Other promising sub-sectors include gas plants, pipelines, flow lines, well pads, wells, compressors, rigs, frack spreads, operations support, and infrastructure.  


The oil and gas sector continues to provide some of the best prospects for U.S. goods and services. A significant portion of the country’s oil infrastructure is aging, which provides a market for pipelines, wellheads, pumps, and related equipment. Additionally, Oman has several older fields and fields with complex geology, and the first serious offshore exploration began in 2017. As a result, Oman needs advanced technology such as 3-D seismic analysis to facilitate exploration efforts. Some in Oman’s oil and gas sector are interested in computer systems that can monitor remote wells and cut labor costs.

Analysts expect investment to shift towards maximizing output from cost-effective reservoirs using innovative technologies to cut costs and eliminate waste. PDO reduced the vast amount of gas flared from more than 60 stacks by approximately 30% from 2019 to 2020 and aims to eliminate routine gas flaring by 2030, according to industry contacts. The Omani government has been investing in liquid bulk storage and hydrocarbon logistics projects in country. Oman is not yet a major refined petroleum product producer but has plans to expand its refining and storage sectors.

Important technical advances are underway in oil discovery and recovery in Oman’s onshore blocks. Industry experts assess great potential for new operations in the country’s offshore blocks, the first major exploration of which began only in 2017. Omani officials have expressed particular interest in proven fracking technologies, presenting opportunities for American companies and their suppliers. As Oman attempts to weather the unstable oil market, it will continue to turn towards more innovative and unconventional oil recovery methods to cut costs and increase efficiencies. Many multinational companies operating in Oman are drawing on their experiences from the U.S. market, primarily in relation to shale production. 

Opportunities in renewable energy could emerge as Oman pursues economic diversification and explores alternatives to hydrocarbons for power generation. Alternative energy supplies could allow Oman to offset substantial domestic consumption of fossil fuels used in electricity production and desalination, the source of most of Oman’s potable water. Substituting alternative energy for fossil fuels in these areas could help Oman generate additional revenues since this would enable Oman to export those fossil fuels instead.

Oman announced plans to monetize certain hydrocarbon assets, including through asset sales and debt issuance, in response to the COVID-19 pandemic’s impact on state finances. In August 2021, media reported that EDO is in talks with various international banks to raise USD 3 billion in debt to finance PDO and Oman’s gas operations, and that OQ is considering a sale of its principal drilling unit and a potential initial public offering. The Ministry of Energy and Minerals has discussed floating three new blocks in 2021.