Oman economy seen getting a boost from gas sector in 2018
Oman’s economic growth is expected to get a boost next year from increasing gas production at Khazzan gas project, according to a report published by the global accountancy and finance body ICAEW.
‘Oman’s economy is excepted to get a boost from the gas sector in 2018, when the Khazzan gas field comes fully on-stream (boosting gas output by an estimated 25 per cent)’, the Institute of Chartered Accountants in England and Wales said in its Economic Insight: Middle East Q3 2017 report.
Global energy giant BP and the Ministry of Oil and Gas last week announced the commencement of production at the Khazzan gas project, which is operated by BP in partnership with Oman Oil Company Exploration and Production (OOCEP).
H E Salim al Aufi, Undersecretary at the Minitry of Oil and Gas recently said that the project was scheduled to start production in the first quarter of 2018, but due to improvement in exploration techniques and efforts taken by the company, they are able to start production much ahead of schedule and at reduced cost.
The ICAEW report noted that Oman is one of the non-OPEC countries that agreed to the OPEC deal so if oil output reverts to pre-OPEC deal levels in the first quarter of 2018, GDP growth could rebound to five per cent in 2018. But if OPEC’s production cut deal is to be extended, GDP growth is expected to be substantially slower, it added.
The report said Oman’s economy is also benefitting from trade diversion, as exporters use Omani ports for transit to and from Qatar. However, this will be a modest and temporary boost, and does little to address the more fundamental challenges the economy faces. ‘Oman has become a key transit point for cargo previously routed through other ports, specifically Dubai’, the report said.
Figures released by Sohar Port and Freezone showed the number of vessels docking rose by 16 per cent in the second quarter of 2017 against the first quarter, and by 18 per cent compared with the second quarter of 2016.
‘This rise in traffic is especially notable in the context that sanctions [on Qatar] were only imposed in June, the final month of the second quarter. The impact in subsequent quarters could be even larger’, the ICAEW report said.
Michael Armstrong, ICAEW regional director for the Middle East, Africa and South Asia said, “Getting the deficit under control soon in Oman is critical, and if the OPEC deal needs to be extended beyond the first quarter of 2018 this will require yet more difficult policy choices to be made by the Omani government in order to achieve financial stability.”