[Oman-L] Oman's oil exports

[Joachim Duester]

Oman has been struggling since many years to maintain
its oil output despite difficult technical conditions.


The situation with regard to oil extraction in Oman
differs in many respects from that in neighbouring
countries: the oil does not come up easily through gas
pressure etc. Oman needs to employ latest, but rather
costly water etc. injection methods to extract oil.
The good thing is that Oman's oil extraction
technology is perhaps one of the most sophisticated
and most modern in the region. The bad thing is that
if the oil price falls drastically to previous levels,
i.e. much below US$20 (which is unlikely,
alhamdulillah), it might even become uneconomical to
extract oil in Oman. 

Another cost factor is the location of Oman's oil
fields. They are far from the coast, behind deserts
and mountains. Transport costs are high compared with
oil extracted offshore, within easy reach of oil
tankers. 

Should investors worry? I think, they should not.
Government revenue from oil and public spending of oil
money is one factor, but there are others: strategiv
location, size of local market, economic dynamism
(look at Dubai!), political stability, good
governance, reliability of government policy,
sustainability of development, attractiveness of the
location, quality of workforce, etc - let's hope Oman
will do fine in some of these fields!

Joachim

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--- Ali Badawy <alibad at link.net> wrote:

> Hello. In response to the message regarding the 
> drop in oil exports, does anyone know why that 
> happened? Was it a voluntary choice by the Omani
> government or is demand/production capabilities
> shifting away?
> 
> Is there any reason for potential foreign investors
> like myself to be alarmed, given that the national
> economy is oil-dependent?
> 
> Salam,
> 
> A.B.