Oman’s oil output rises 4% y/y in 2015, exports grow 6%

By bne IntelliNews January 21, 2016

Non-OPEC member Oman produced 358mn barrels of oil in 2015, marking a 4% annual expansion, while exports rose 6% to 308mn barrels (86% of the total), the statistics office reported.

Higher oil output, following a period of stagnation, is good news for the government amid falling hydrocarbons prices and the related negative impact on the fiscal balance.

In 2015, however, the price of Omani oil plunged 45.3% to an average of $56.5 per barrel, thus weighing heavily on the state budget.

Crude oil output grew 3.4% y/y to 323mn barrels last year while that of condensate increased 10% y/y to 35mn.

China imported the bulk of Omani oil output at 238mn barrels in 2015 up 13% and Taiwan followed at 28mn barrels

As to natural gas production, it rose 5.6% y/y to 39.8bn cubic meters in 2015.

The increase was attributed to rising usage of natural gas in power generations oil fields and industrial projects.

Plummeting oil income pushed Oman’s state budget into an OMR323mn ($840mn) deficit in October last year, swinging from an OMR54mn surplus the year before, amid high base effects, according to the latest data from the statistics office.

A period of sustained low oil prices will dampen Oman's fiscal and external balances more than previously expected, pushing Standard & Poor’s to recently lower the kingdom’s long-term foreign and local currency sovereign credit ratings to BBB+ from A- while affirming the short-term ratings at A-2.

The ratings have negative outlooks, reflecting S&P view that the government's fiscal and external positions could worsen beyond its current expectations over the next two years. S&P also assessed Oman as “having insufficient fiscal and external strength to offset the concentration of its economy in the hydrocarbons sector and the resulting volatility.”

S&P warned that the government has “limited room for spending cuts, given that nearly 50% of spending relates to public-sector wages and subsidies and exemptions, which are typically difficult to reduce.”

As to Oman’s external position amid falling oil windfall, S&P forecast the sultanate to run a current account deficit in 2015 of nearly 14% of GDP. The current account deficit will remain in double digits until 2018.

Related Articles

Ankara and Tehran join wave of anger directed at Trump’s recognition of Jerusalem as Israel’s capital

US President Donald Trump's December 6 announcement that his administration has decided to unilaterally recognise Jerusalem as Israel's capital was described as “against international law” by ... more

Islamic State is finished declares Iran's President Rouhani

Iranian President Hassan Rouhani on November 21 declared the end of the so-called Islamic State militant and terrorist group following decisive battles in Iraq and Syria. Stating that he wished to ... more

Turkey the loser as Baghdad rewards Iran with control of Kurdish oil exports

Iran is taking control of oil exports from Iraqi Kurdistan's giant Kirkuk field with Baghdad authorising the move as a reward for the Iranians' help in quelling the Kurds' late September push for ... more