MUSCAT, 17 July 2005 — Oman is aiming for economic growth of not less than 3 percent a year in the next five years despite falling oil output, newspapers reported yesterday.
The next five-year plan of the pro-Western Gulf Arab state, which runs from 2006 to 2010, also aims to raise the standard of living, create jobs for nationals and enhance non-oil revenues, Economy Minister Ahmad bin Abdul-Nabi Mekki said in a statement.
Gross domestic product (GDP) grew an average annual 5.4 percent in the first four years of the last five-year plan which began in 2001, which was 12.7 percent above target, he said. This was mainly due to high oil prices, which more than compensated for falling output. The country’s GDP grew 14.4 percent to 9.5 billion rials ($24.7 billion) in 2004, compared with a 6.9 percent rise in the previous year, Oman’s central bank said in a report. This was despite a 4.6 percent drop in oil production in 2004.
The independent oil producer’s crude output declined to an average 797,500 barrels per day in the first four years of the plan, or 12.2 percent below target, the minister said. “The decline in production was mainly on account of technical problems faced by the Petroleum Development Oman,” he said.
Oman has said it would invest $600 million on new technology in 2005 to develop an oil field in the south of the Gulf Arab state to boost crude production. The rise in oil prices boosted the average annual oil revenue to 2.27 billion rials during the 2001-04 period, 20.4 percent over the plan’s target which was based on an oil price of $18 per barrel.
Mekki said state revenue reached an annual average of 3.22 billion rials in the first four years of the sixth plan, 26.5 percent over target. Annual government expenditure moved up an average 16.1 percent over target to 3.20 billion rials. State budgets for the 2001-04 period achieved an average annual surplus of 24 million rials, versus a planned average deficit of 208 million rials a year.
Meanwhile, Oman’s Sohar Aluminum Company signed yesterday a deal with US firm Bechtel to build a $2.2 billion aluminum smelter project in the north of the country. The Omani company said in a statement that construction of the 325,000 tons-per-year smelter, part of a project which also includes desalination and electricity plants, would begin before the end of the year. The smelter is expected to start production in 2008.
Tony Kinsman, Sohar Aluminum’s CEO, said the firm would borrow up to 55 percent of the project’s cost. He gave no further details.
The smelter project, expected to contribute 2 percent to gross domestic product of the Gulf state, is part of a drive by non-OPEC oil producer Oman to wean is economy off crude sales. It would also further boost aluminum production in the Gulf Arab region, already home to major smelters Aluminum Bahrain and Dubai Aluminum which have a combined capacity of more than one million tons.
Sohar Aluminum is a joint venture of the state-owned Oman Oil Company and Abu Dhabi Water and Electricity Authority (ADWEA), each holding a 40 percent stake. Canada’s Alcan Inc. owns the remaining 20 percent. A joint venture of Canada’s SNC Lavalin and Murray & Roberts Engineering of South Africa had also bid for the smelter project.
