The fall in ouput took place as other Gulf countries succeeded for the first time since 2001 in pumping more crude.
Oman oil exports down
Oman's oil exports fell in the first nine months of this year, even though the country succeeded for the first time since 2001 in pumping more crude. The development reflects rising domestic demand for crude in Oman - following a trend towards higher oil consumption throughout the Middle East. Oman's oil exports between January and September of this year declined 3.6 per cent to about 590,000 barrels per day (bpd) from 612,000 bpd in the comparable period last year, according to government data released yesterday. In the same period, the sultanate pumped 750,000 bpd of crude, up 6 per cent from 707,000 bpd a year earlier. Attempting to reverse a production decline that began in 2001, when the country's crude output peaked at 961,000 bpd, Oman has become the Gulf region's leader in the use of enhanced oil recovery (EOR) technology to prolong the life of its ageing oilfields. Since 2005, it has welcomed foreign partners including the Anglo-Dutch energy group Royal Dutch Shell, the US company Occidental Petroleum, the French oil enterprise Total and Chinese National Petroleum Corporation to provide technical expertise to the efforts. In February, the state-controlled Petroleum Development Oman (PDO), in which Shell is the largest foreign investor, said it was planning dozens of new EOR projects by 2012 to stem Oman's production decline. At the time, PDO, which accounts for about 80 per cent of the sultanate's total crude output, was expecting its production to decline to 550,000 bpd this year, about 2 per cent less than last year's average of 561,000 bpd. But although Oman's oil production drive is proving effective, it has been costly and has not had the desired effect of pushing up exports and revenue potential. Last year, PDO spent more than US$2 billion (Dh7.34bn) on oil development projects. Oman's oil and gas ministry said earlier this year that it planned to spend up to $10bn more by 2012 to boost production from mature fields. Predicting that oil output would average 790,000 bpd this year, the country's oil minister at the time, Abdullah Macki, in January forecast oil export revenues for this year of $9.4bn. But with Omani crude recently trading below $50 a barrel and exports falling, that revenue projection may be in jeopardy. So may some of the sultanate's planned EOR projects. Industry experts estimate that an oil price of at least $50 is needed for EOR to be economic, and financing such projects has become much harder due to the global credit crunch. "The recent financial problems will have an impact because most of our projects are on project finance," Mohammed al Rumhy, the present Omani oil minister, told an oil conference earlier this month. He nonetheless predicted that Oman's crude production would continue rising to about 800,000 bpd next year from between 750,000 and 760,000 bpd this year. But Oman may have no choice but to continue investing in costly energy development projects, if only to satisfy its burgeoning domestic demand for oil and gas as it moves to diversify its economy through industrial development. Other Middle Eastern oil producers face similar dilemmas. On Sunday, a senior Iranian oil ministry official said Iran's government would ask the country's parliament for up to $5bn to import additional fuel for the 12-month period ending next March. This would be in addition to the $3.3bn budgeted this year for fuel purchases. Iran is the world's fourth-largest crude exporter, but lacks refining capacity to meet its domestic needs for petrol and other petroleum products. In June last year, it started rationing subsidised petrol in a move to curb soaring consumption. In its November oil market report, the International Energy Agency predicted that oil demand in the Middle East would increase 6.2 per cent, to 6.93 million bpd this year, and a further 4.3 per cent next year to 7.23 million bpd. That is well above its prediction of 0.1 per cent this year and 0.4 per cent next year for growth in global oil demand. email@example.com