OMAN will account for just 0.61 per cent of Middle Eastern and African (MEA) regional oil demand by 2012, while providing 1.80 per cent of supply, the latest Oman Oil and Gas Report from BMI forecasts.

MEA regional oil use of 8.70 million barrels per day (bpd) in 2001 rose to an estimated 11.21 million bpd in 2007. It should average 11.54 million bpd in 2008 and then rise to around 12.90 million bpd by 2012. Regional oil production was 30.39 million bpd in 2001, and in 2007 averaged an estimated 35.53 million bpd. It is set to rise to 40.94 million bpd by 2012.
In terms of natural gas, the region in 2007 consumed an estimated 413 billion cubic metres (bcm), with demand of 650bcm targeted for 2012, representing 57.4 per cent growth.
Production of an estimated 570bcm in 2007 should reach 941bcm in 2012 (+65 per cent), which implies net exports rising from an estimated 157bcm in 2007 to 291bcm by the end of the period. In 2007, Oman consumed an estimated 3.15 per cent of the region’s gas, with its market share forecast at 2.77 per cent by 2012. It contributed an estimated 4.60 per cent to 2007 regional gas production, and by 2012 will account for 2.98 per cent of supply.
Global oil demand growth is now expected to have been 1.7 per cent for 2007, rising to a little less than 2 per cent in 2008. Asia and the CEE continue to dominate. The overall demand outlook for the period to 2012 remains healthy (average growth 1.8 per cent), but subject to review if the macroeconomic outlook deteriorates.
BMI is still assuming some easing of energy prices during the period, but from a much higher level than envisaged earlier. Supply growth is capable of matching demand expansion – but only if Opec cooperates as non-Opec forecasts are fragile.
Between 2006 and 2012, supply would rise by an average 1.7 per cent per annum – subject to Opec strategy. BMI’s revised central view is that the Opec basket price will rise from around $69/b in 2007 to $74 in 2008, before settling around $71/b in 2009 and falling further to $70/b in 2010-12.
Oman’s real GDP growth is forecast by BMI at 4.3 per cent for 2008, following an estimated 4.4 per cent in 2007. BMI is assuming 4.1 per cent growth in 2009 and 3.0 per cent in 2010, followed by 2.9 per cent in 2011 and 3.2 per cent in 2012.
BMI expects oil demand to rise from an estimated 62,000 bpd in 2006 to 79,000 bpd in 2012, representing 5.0 per cent annual growth that exceeds its underlying economic assumptions.
Partly state-owned Petroleum Development Oman (PDO) accounts for more than 90 per cent of the oil and gas produced in the country, but relies on international oil companies (IOCs) to maintain volumes. BMI estimates assume 740,000 bpd of 2007 oil and liquids production, followed by a short-lived rally back to the 780,000 bpd level in 2009,before volumes again sink to 735,000 bpd by the end of the forecast period.
However, there is a high risk that production will stabilise at a level nearer 750,000 bpd. Gas production should reach 28bcm by 2012, up from an estimated 26bcm in 2007. Consumption is expected to rise from 13bcm to 18bcm by the end of the forecast period, allowing exports of just 10bcm.
Oman occupies the 10th place in BMI’s newly revised Upstream Business Environment rating, although it should be able to overtake its nearest rival over the medium term. It is just one point ahead of Iran, but should be able to keep it at bay during the next few quarters.
The country’s score benefits from a sound country risk profile, good licensing terms and a healthier privatisation trend than that seen elsewhere in the region. The country is in the lower half of the league table in BMI’s newly-revised Downstream Business Environment rating, with a few high scores and near term progress up the rankings unlikely.