Thursday, January 8, 2009

While OPEC cuts, Oman boosts oil production

I realised the Government were saying that oil production would creep up a bit this year.

But I hadn't thought about that comment very much. But it is quite interesting that while OPEC struggle to cut production, Oman is upping it.

This shows why Oman isn't a member of OPEC (as well as avoiding having to pay a share of the significant costs to run OPEC day-to-day). A 5-8% growth in production is good news for Oman if the oil price holds. It's taken the Government 8 years to turn around the country's production decline, and it looks like they've done it.

Its very hard, once a country's oil production peaks, to reverse the decline. Oman should feel pretty proud that the steep production decline of the past few years has been arrested or even reversed.

Oman Oil Production - 2007 from Crude Production blogspot

At $45 a bbl, Oman should net about $7 billion this year from liquids export, after taking out the big investment costs for ongoing oil and gas projects (about $5 billion in 2009). At $70, that net cashflow almost doubles to $13bln.

So you can see oil price is going to be far more important than volume to Oman's coffers this year. Everyone in Oman should be praying for a nice high price!

Oman oil output to rise in 2009

ONA reported that while OPEC members are formally cutting crude outputs, Oman’s oil production in 2009 could rise to about 810,000 barrels per day.

It quoted Mr Mohammad bin Hamad Al Rumhy, the Sultanate’s oil minister as saying that the non OPEC oil exporter sees USD 70 a barrel as a fair price for oil which is suitable for both consumers and producers. He added that “There are new discoveries in oil and gas and the sultanate's oil production will reach between 805,000 and 810,000 barrels per day.”

In November 2008, Mr Rumhy said that he expected Oman’s oil production to rise to 800,000 barrels per day in 2009 from 750,000 to 760,000 barrels per day in 2008.

(Sourced from: Oman News Agency)


  1. Interesting information.
    I left PDO in 2001, shortly before the production decline started. Just before I left, there were rumors that the oil fields were being mismanaged. PDO had initiated a bonus scheme tied to barrels produced, and the production people were pumping every barrel they could to make their bonuses NOW, not worrying about the future. Whereas this may not have been the primary reason for the decline, I think it was a contributory factor.
    In any case, PDO is to be congratulated. Lets hope this short time increase becomes a long term trend. Abd

  2. The PDO has been making a big push towards increasing the efficiencies of oil producing wells. They are now willingly exploring processes and technologies, beyond those offered by the likes of Schlumberger or Shell.

    This is the main reason why I am here. In my day to day I see how the existing processes, methodologies and technologies are extremely inefficient, to put it nicely. This might have been acceptable when oil was available on-tap, but now we are being hosted here to help tighten things up and introduce new ways of doings things better and cheaper.


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