Oman Hydrocarbon Sector
Figure 14. Oman: Oil Fields, Gas Fields, and Refineries, 1993
Since the first commercial field was discovered at
Jibal,
west of Adam, in 1962, the petroleum industry has
dominated the
economy. In 1991 the industry contributed about 43 percent
of GDP
and 82 percent of government revenues. The government's
heavy
reliance on crude oil export earnings to maintain its
income
distribution system and political stability made continued
development of this sector a priority.
By early 1977, the newly organized Ministry of
Petroleum,
Fisheries, and Agriculture prematurely assumed that
production
had probably peaked at more than 350,000 barrels per day
(bpd-- see Glossary)
and would decline. Exploration activity in
the south was insignificant, deterred by political instability
in the
region, and production at the main fields of Petroleum
Development Oman (PDO) in the north, including Jibal, was
in
decline
(see
fig. 14). The suppression of the Dhofar
rebellion in
the mid-1970s helped reverse an output decline. Foreign
exploration companies, satisfied with the restoration of
political stability, began to sign area exploration and
production agreements with the government. Enhanced oil
recovery
(EOR) techniques at existing fields, combined with new
fields
coming onstream, raised average output to 708,000 bpd in
1991.
The principal problem the government faced in the early
1990s
was a diminishing reserve base. Proven reserves were
estimated at
4.6 billion barrels in 1992, small in comparison with
other gulf
states. At the mid-1992 rate of production of 725,000 bpd,
Oman's
crude reserves are sufficient to permit seventeen years of
output, compared with nearly 350 years for Saudi Arabia.
Oil prospecting began in 1924 when the Anglo-Persian
Oil
Company (later renamed British Petroleum) obtained a
concession;
however, unsuccessful exploratory drilling discouraged
further
interest. Discoveries in Bahrain and Saudi Arabia during
the
1930s stimulated exploration activity. The first
concession
agreement was signed with Petroleum Concessions, a Western
consortium formed by the owners of the Iraq Petroleum
Company
(IPC). In 1951 the concessionaire's name was changed to
Petroleum
Development Oman (PDO). In 1993 PDO remained the principal
operating company and controlled the bulk of oil reserves
and
output.
After several years of costly and unsuccessful
exploratory
drilling, most IPC partners wanted to withdraw from their
concession area. In 1960 Royal Dutch Shell acquired an 85
percent
interest in PDO; Participations and Explorations (Partex)
held
the remaining 15 percent share. In 1967 the French firm
TotalCompagnie Française des Pétroles acquired 10 percent of
Partex's
15 percent interest. In December 1973, the government of
Oman,
following the participation agreements negotiated by
several gulf
countries, acquired a 25 percent share of PDO. In July
1974, the
government's stake was raised to 60 percent, retroactive
to
January 1, 1974. Since 1974 the remaining 40 percent has
been
held by Royal Dutch Shell with 34 percent, Total-Compagnie
Française des Pétroles with 4 percent, and Partex with 2
percent.
PDO operates two main production areas: a group of
northern
oil fields, including Jibal, Fuhud, and Sayh Nuhaydah,
that
produce lighter grades of crude oil; and a group of
southern
fields, including Rima, Mamul, Amal, Nimr, Mukhaizna, and
Sayyala, that produce heavier crudes. Development of the
southern
fields was contingent on the suppression of the Dhofar
rebellion
and the reestablishment of political stability in the
sultanate.
Data as of January 1993
|