State-owned Oman Oil Company is reportedly looking at selling a 10% stake in one of its major gas fields in the country for about $1 billion or more.
In September 2017, BP, jointly with the Ministry of Oil & Gas of the Sultanate of Oman started production at the Khazzan gas field in partnership with Oman Oil Company. BP owns 60% of the field, while the remaining 40% is owned by Oman Oil.
According to reports Indian, Middle Eastern and Chinese companies were interested in acquiring a stake, which Oman Oil expects to get a bid for by July. However, the plan is pending final approvals and Oman Oil can even decide not to sell it.
One of the biggest tight gas projects in the Middle East, Khazzan gas field currently produces 5.5 million barrels per day. It is a strategic project for Oman that has struggled with low oil prices, mainly because it has a higher breakeven price among the GCC countries.
The gas field has helped it diversify away from oil and have helped push employment numbers. Khazzan Gas Field employs 19,000 people, significantly helping Oman improve employment within its economy.
Oman’s GDP is projected to grow by 2.3% in 2018 and 2.5% in 2019, according to World Bank.
With economic growth set to accelerate on the back of rising production from the Khazzan gas field, the Gulf nation’s economy saw a slight development in 2017 posting a 2% growth compared to 1.5% in 2016.
Like other GCC countries, Oman too is heavily reliant on revenues from its oil and gas resources, but off late the country is looking to diversify its revenue generation stream.
Although Oman is not a part of the cartel OPEC, the Sultanate signed an agreement in December 2016 with OPEC members and Russia to curb oil production to boost prices in order to ease a global surplus after oil prices remained low for more than two years.
According to IMF, Oman is strengthening its fiscal position by diversifying into private-sector led growth, non-oil imports and tourism.
Unlike its neighbors Saudi Arabia and the UAE. that started imposing 5% VAT starting January 1, 2018, Oman will implement value added tax (VAT) only by 2019. The Sultanate will start taxing few goods by mid-2018.
IMF, after its Oman visit in April 2018, concluded that new excise taxes and the 2019 VAT should help bring Oman’s fiscal deficit to below 4% of GDP by the end of the decade and raise its revenues.