Oil, Gas, and Industry in Oman
Oil, Gas, and Industry in Oman
Oil and gas are the two industries that still account for the largest part of the Omani gross domestic product. It was around 51% in 2013. This leads to the fact that still around 85% of state revenues come from the sale of oil and gas, which in turn leads to an enormous dependence on factors such as oil prices and the global demand for oil and gas. Coupled with the fact that Oman is a country that has comparatively few oil reserves that can be extracted without significant technical and financial effort, this poses a mammoth task for the political leadership. For relying solely on oil and gas makes little sense in Oman – at least if one wants to continue presenting a forward-looking image as has been done in the past decades. The oil boom has led to massive economic growth within a very short time. In Oman, an economy has emerged within fifty years, with infrastructure, education system, information technology and state regulations, for which some industrialized nations have taken over a century. However, for this economy to be sustainable in the future, changes must be initiated. That is exactly what is happening right now.
The industry is strengthened – oil and gas remain
Several years ago, a decision was made in Oman to continue to rely on this economic sector even when the cheap oil reserves are exhausted and the profits from oil and gas extraction shrink – but not without simultaneously strengthening other industries. Besides the service sector, which now accounts for around 41% of the gross domestic product in Oman, areas such as the tourism industry and the manufacturing industry are also being further promoted. This will increasingly involve foreign investors as well. However, unlike in other Arab states, Oman is also relying on revenues from taxes on corporate profits and a value-added tax that is set to be introduced. This aims to increase state revenues and create new opportunities for further investments in the industry.
Other economic sectors have long been ready to go
Oman has a decisive advantage over other oil states: There are other economic and industrial sectors here that, while still not as developed as oil and gas extraction, are nevertheless on the rise, such as mining for mineral resources in the country's mountains. Light industry, metal production, and consumer goods manufacturing will also continue to be promoted.
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