Widening base: Oman tries reduce its dependence on oil exports
Oman plans to slash oil export reliance
Oman plans to drastically reduce its reliance on oil exports and double its income from industrial activities in the coming decade as the Gulf Arab region strives to diversify away from crude export revenues.
The non-Opec oil exporter aims to reduce the contribution of the oil sector to its gross domestic product to 9% by 2020 from 41.5% in 2007, according to an official planning document from the Ministry of National Economy.
"The economy would no longer be oil-reliant in 2020. It is envisaged to be a diversified economy with higher levels of savings and investment," the document said.
Like its neighbours in the world's top oil-exporting region, Oman accumulated large surpluses as oil prices rallied in the six years to mid-2008 and the sultanate has undertaken swift fiscal expansion since 2002 to diversify its economy.
Output from the country's ageing oilfields has been sliding in recent years. It pumps around 760,000 barrels per day and says it is targeting output of 800,000 bpd in 2009.
The industrial sector's contribution to GDP would rise to 29% in 2020 from 14.3% in 2007, while the service sector - including wholesale and retail trade - would climb to 46.9% from 40.5%.
Agriculture and fishing would increase to 5.1% from 1.3%, according to the document.
"The sources of national income will be diversified, with the non-oil sector assuming the primary role," the ministry said, adding that the gas sector's contribution would rise to 10% from 3.8%.
Oman's GDP in 2008 amounted to 23.05 billion rials (US$59.87 billion) up from 16.01 billion rials in 2007.
The non-oil sector contributed only 15.2% to total growth.
Oman posted a 56% drop in net oil revenues in the first three months of the year as oil prices weakened, forcing the government to turn a deficit to sustain 10% growth in spending.
The price of US crude oil collapsed to the mid-$30 a barrel level earlier this year from peaks of just over $147 a barrel last July.
It currently trades at around $67 dollars.
The sultanate plans to privatise a number of state-run power and water projects and last week relaxed its corporate tax law to attract foreign investments and boost non-oil revenue.