Oman's energy production
Oman's energy production is primarily based on fossil fuels, particularly oil and natural gas, which form the backbone of its economy. In 2021, the country produced an estimated 1.056 million barrels of crude oil per day, marking a minor decline from earlier years. The domestic energy landscape is characterized by a significant reliance on oil and gas, with minimal use of coal and limited renewable energy sources. Oman's natural gas is mainly used in gas-turbine-fired generators, known for their efficiency and quick restart capabilities. Despite having substantial gas reserves, the country faces challenges in accessing these resources and often imports gas from neighboring Qatar to meet rising internal demand, particularly during the summer months.
Oman has the largest oil reserves among non-OPEC countries in the Middle East, with ongoing efforts to diversify its energy sector. While the government has initiated projects in renewable energy, such as exploring solar and wind power potential, these sources accounted for only a small fraction of electricity generation as of 2021. The country’s rugged terrain and high solar density present opportunities for expansion in renewables, but economic and infrastructural barriers, including substantial subsidies for fossil fuels, hinder progress. As global dynamics shift and the costs of renewable energy decline, Oman may face an inevitable transition from its traditional dependence on fossil fuels towards more sustainable energy solutions.
Subject Terms
Oman's energy production
Official Name: Sultanate of Oman.
Summary: Oman, located at the southeastern edge of the Arabian Peninsula and bordered by the United Arab Emirates, Saudi Arabia, Yemen, the Arabian Sea, and the Gulf of Oman, is one of the most developed and stable nations in the Arab world.
In 2021, Oman produced an estimated 1.056 million barrels of crude oil per day, down 6 percent from 2000. Most domestic energy came from fossil fuels oil and natural gas, with no use of coal and little use of renewable energy. The country consumed about 211,000 barrels per day—about four times the 52,000 barrels per day consumed in 2000. Industrialization and a growing petrochemical sector are major reasons for this increase, as are more roadways and more vehicles.
Oil and Natural Gas
Oman currently uses its own natural gas to produce energy in gas-turbine-fired generators, which are highly efficient and can be started and stopped quickly. They are also much cheaper to build than coal plants of comparable size. The Omani plants can also combine with desalinization plants. Although Oman has additional gas reserves, they are underdeveloped because of the difficulty of accessing them. Oman imports gas from Qatar to satisfy internal demand, which is so great in summer that there is a shortage of electricity. The result is that economic development is hampered. Oman’s diversification efforts rely on oil and gas as feedstocks, so diversification hinges on success in the sectors from which it seeks alternatives.
Oman has the largest oil reserves of any Middle Eastern country not a member of the Organization of Petroleum Exporting Countries (OPEC), estimated in 2022 at 5.373 billion barrels, located primarily in the north and central offshore areas. It also had significant natural gas reserves, 651 billion cubic meters in 2021, and exported 15.446 billion cubic meters of gas in 2022.
Oman produced an estimated 1.056 million barrels of crude oil per day in 2022, up from 982,000 barrels of oil per day in 2015 and 714,000 in 2007. It was the world’s seventeenth-largest exporter of natural gas and the fourteenth-largest oil exporter in 2022. By OPEC standards, Oman's output is relatively small.
The Sohar refinery, northwest of Muscat, opened in 2006 with a capability of processing 116,000 barrels per day. The 106,000-barrel-per-day Mina al-Fahal facility, near Muscat, refines all exported oil. The government owns 75 percent of the Oman Refineries and Petrochemicals Company, which runs the refineries, with the Oman Oil Company, which owns the rest. In the 2020s, Oman built several new refineries, capped off by the Duqm Refinery, which began production in 2023 with a capacity of refining 230,000 barrels per day.
The government owned 60 percent of the primary oil production company, Petroleum Development Oman, which has 90 percent of the oil reserves and operates 1,000 miles (1,609 kilometers) of pipeline. The Gulf Cooperation Council is building a regional grid that will give Oman the option of importing electricity from neighbors, particularly the United Arab Emirates, which built a nuclear energy facility that began opertating in 2019.
Prospects for Renewable Energy
In 2008, the Authority for Electricity Regulation received a report from a team of international consultants about the potential of renewable energy for Oman. The report indicated that Oman has one of the highest densities of solar energy of any area of the world. Technical difficulties with renewables include the unreliability of wind and the cost-effectiveness of storing solar power for use during times of darkness. If developed properly, solar power could meet all of Oman’s domestic needs and provide electricity for export. Especially high densities are in the desert areas, while the southern coastal areas have the lowest densities; by world standards, however, all regions have high solar density.
Wind is a good potential source of renewable energy in the mountains north of Salalah and in the southern coastal region. Those areas record wind speeds comparable to those at inland wind turbine sites in Europe. Moreover, wind energy peaks in the summer, the period of highest electricity demand in Oman. A theoretical subsidy for renewable sources through carbon trading has not yet been put into place by the Omani government. The amount of money involved, according to the Kyoto Protocol, is $20 per ton of carbon dioxide saved. That could generate a cost reduction of the “gas price equivalent” by more than $1.20 per thousand cubic feet.
Landscape Drawbacks
Geology makes Oman’s oil production costs among the highest in the region. Examination of the feasibility of enhanced oil recovery (EOR) began in 2002, and Oman now is dependent on EOR of various types, depending on geology. As the country moves increasingly to secondary and tertiary extraction methods, its costs will rise even more, but so far EOR has managed to stem and reverse the decline in production it had endured for nearly a decade. Production rose by better than 37 percent from 2007 to 2015. The government wanted to increase gas reserves by a trillion cubic feet per year for 20 years because of growing demand for domestic consumption, exports, and reinjection. The country is short of feedstock at peak electricity generation periods, and the result is service interruptions that hamper industrialization and diversification and overall economic growth.
Although oil and gas are becoming inadequate, Oman remained slow to develop renewable energy. One problem is that wind and solar have to compete with the current fossil fuel electricity-generating infrastructure. The government provided a significant subsidy for electricity, which is sold well below the real cost of production. The subsidy was between 120 million and 250 million Omani rials (between $46 and $100 million) per year. In 2021, Oman received just 0.06 percent of its electricity from renewables.
Eventually alternative fuels will be competitively priced, and eventually state supports for fossil fuels will become unpopular—or too expensive, as the cost of production rises. At that point, Oman will have no choice but to transition from fossil to renewable energy.
Bibliography
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