Outlook for 2011-12

• The protests that started in Oman in late February are unlikely to die down unless the sultan, Qaboos bin Said al-Said, takes concrete steps to address corruption and unemployment and bring in genuine political reform.
• In spite of anti-government protests, the sultan retains genuine popular support. It is unlikely that the protests, which target ministers and powerful businessmen, will yield the same results as those in Tunisia and Egypt.
• The country remains vulnerable to the effects of any future confrontation over Iran's nuclear programme, given both the sultanate's proximity to Iran and the stationing of Western military bases on its territory.
• The government will increase public spending in an effort to appease the protesters. Economic policy over the forecast period will focus on meeting the employment needs of a young and fast-expanding population.
• We have revised up our 2010 growth estimate to 4.5% of GDP as oil production increased substantially. Real GDP growth will accelerate further over the forecast period, to an average of 4.9%, owing to high oil prices.
• We forecast that average consumer price inflation will increase to 4.1% in 2011 as food prices rise, but will fall to 3.9% in 2012 as prices stabilise.
• The current account is expected to record surpluses in 2011-12, driven by higher oil prices, but production growth will be modest. We forecast an average surplus of 3.1% of GDP in 2011-12, down from 3.6% of GDP in 2010.

Monthly review

• The wave of protests that has spread to the Middle East since mid-December broke over Oman in late February. Official sources report one death, but other reports have put the death toll at six people.
• The protests, which began with peaceful demonstrations in the capital, Muscat, have turned violent in Sohar, with a police station and government vehicles being burnt.
• The major cabinet reshuffle implemented in early March has been welcomed by the protesters. A ministerial committee has also been formed to look at widening the powers of the consultative council.
• Plans for Oman's third oil refinery, to be built at Duqm, are close to being approved. Talks, which began in 2006, were postponed in November 2008 owing to the global economic crisis.
• Petroleum Development Oman, the largest oil producer in the country, reported average output for 2010 of 553,000 barrels/day, marginally higher than in the previous year.

Peaceful protests, which began in the capital, Muscat, on February 18th, quickly turned violent a week later in Sohar, where protesters set fire to government vehicles and a police station. The measures implemented by the government so far have failed to appease protesters and are unlikely to do so if the sultan, Qaboos bin Said al-Said, does not combine economic reform with genuine political reform. As things stand, the Economist Intelligence Unit does not expect the protests in Oman to yield the same results as in Tunisia and Egypt; they are aimed at the close circle of ministers who advise the sultan and the handful of powerful businesses that maintain a stranglehold over the commercial sector. However, if there are more deaths owing to heavy-handed policing tactics or if there are sustained protests, the situation could worsen. The intensity of the protests is surprising, since they follow celebrations as the sultan completed 40 years of rule in 2010. The main risk factors include the fact that the sultan retains all decision-making power. The government is appointed by the sultan, who is also the prime minister and holds the defence, finance and foreign affairs portfolios. The sultan ordered a major reshuffle on March 7th, which will go some way toward calming the situation, but more political and economic reform needs to be implemented to prevent protests from intensifying.

The biggest political risk, and one that is likely to further alienate Omani citizens from the political process, is the uncertainty over who will succeed the long-serving sultan. The sultan has no children, and none of the three first cousins widely viewed as the leading candidates to succeed him has yet been trusted with substantial executive power. The most prominent among these is Asad bin Tariq al-Said, who is currently a special representative of the sultan.

The final decision on who will succeed Sultan Qaboos will not be made until after his death, when family members will have three days to choose a successor. Should they prove unable to agree, a letter left by the sultan naming his choice of successor will be opened, and that person will become the new leader. The system is untested and unusual-Arab monarchies tend to have named crown princes. In light of the protests, this unusual method will not sit well with protesters, as it excludes citizens from participating in the transfer of power.

The Council of Oman (parliament) comprises the Majlis al-Dawla (State Council) and the Majlis al-Shura (Consultative Council). Members of the Majlis al-Dawla are appointed by the sultan for a four-year term. Members of the 83-seat Majlis al-Shura are elected for a four-year term by universal suffrage, but the council has no legislative powers. Widening the powers of the Majlis al-Shura has been one of the main reforms demanded by protesters. The next elections for the Consultative Council are due to be held in October 2011. Women are encouraged to participate in the elections, but even though a number of women were nominated as candidates by their districts in the election in October 2007, all the seats were won by men.

In light of the protests, the sultan has set up a committee to look into widening the powers of the Majlis al-Shura. Following the major cabinet reshuffle, some of its members have been appointed to cabinet positions. This may also lead to the Majlis al-Shura itself acquiring legislative powers.

Oman's ties with its most important international allies-the US and the UK-will remain strong over the forecast period. However, relationships with Asian countries, especially India and China, will continue to strengthen. Oman also has good relations with Iran and will continue to monitor the ongoing dispute over Iran's nuclear programme with some discomfort. In August 2009 the sultan visited Iran for the first time since the 1979 Islamic revolution, signalling Oman's willingness to engage directly with the country during a period of heightened international tension. Oman is therefore likely to maintain cordial relations with its Western allies as well as with Iran. The increasing isolation of Iran from the international community will allow Oman to act as a bridge between the West and Iran, increasing the importance of its role as a mediator.

Oman advocates a strong diplomatic approach to the Middle East's other political issues, including the Israeli-Palestinian conflict. It has publicly backed the unity of its neighbour, Yemen, following rising instability there. Relations with the UAE have been strained following the announcement of the discovery of a network of spies working for the UAE. There were also rumours alleging that the UAE was behind the protests in Oman, although these rumours have been widely discredited by the government itself. Given the political, economic and military importance of Oman's historical links to the West, we expect no change in the sultanate's pro-Western foreign policy in 2011-12.

The government will continue to pursue reforms that lead to diversification away from oil and gas and that promote non-oil exports. However the immediate focus will be on increasing the number of jobs for Omanis in both the public and the private sector and, it is hoped, providing Omani students with the relevant qualifications that make them employable in the job market. The new eighth five-year development plan (2011-15) allocates more than OR1.5bn (US$3.9bn) to the development of non-oil exports and infrastructure development. However, the government will also invest in increasing Oman's crude oil production. Oman's main oil company, Petroleum Development Oman, announced a marginal increase of 1,000 barrels/day (b/d) in crude oil production in 2010, but gas production rose by 9% to 446,000 barrels oil equivalent per day. The use of enhanced oil recovery (EOR) techniques produced results in 2010, with oil production increasing by 6.4% year on year to an average of 865,000 b/d, but most of this seems to have came from the Mukhaizna oilfield, which is operated by a joint venture between Occidental Petroleum of the US and Liwa Energy of the UAE. A shortage of gas may cause some projects to be delayed. Plans to expand gas production are under way with a total of OR412m (US$1bn) set aside. Tourism will play a key role in diversifying revenue. Endeavours to increase the role of the private sector in large-scale projects will continue. Oman is financially well positioned to withstand a fall in oil prices and has based its 2011 budget on a price of US$58/barrel, well below our forecast of US$90/b for Brent Blend in 2011 (which is subject to change as events unfold).

The government will intensify its "Omanisation" policy (the replacement of expatriate workers with local staff) in light of the protests. It will focus on educating and training Omanis to develop local professional and technical expertise. The authorities recently increased the minimum wage for Omanis employed in the private sector by 43%, and we expect other such measures to be implemented, although they will have a limited impact on stemming the protests, if they are not accompanied by political reform. The private sector will come under pressure to meet targets to increase the number of jobs for Omani citizens, while cracking down on illegal workers in the country. Despite changes to the Labour Law, however, supply-side problems are likely to continue to slow progress on Omanisation.

The 2011 budget projects a 14% year-on-year rise in total public revenue estimated at OR7.3bn. The budget also assumes an increase of 13% in expenditure to OR8.1bn, thereby implying a budget deficit of OR850m. However, we expect expenditure to increase as the government will increase subsidies, unemployment benefits and other monetary handouts in an attempt to prevent more protests. We forecast an average oil price of US$90/b although it is likely that prices will increase as risk premiums in the oil market widen on the fear that the protests might spread to other oil-exporting countries in the region. We estimate that government revenue increased by 18% year on year, to OR7.9bn in 2010 as a result of increases in oil production and oil prices. We have revised up our forecast for revenue in 2011 to OR8.4bn as oil prices are expected to increase. We have also revised up our forecast for government spending in 2011 to OR8.1bn as the government will increase wages and unemployment benefits. We expect the budget surplus to narrow marginally to 1.2% of GDP in 2011. Increased expenditure in 2012 will lead to a further narrowing of the surplus, to 0.8% of GDP.

Monetary policy will be largely unchanged in 2011-12, and there will be little pressure on the Omani riyal's peg to the US dollar. Confidence in the peg is underpinned by a decision, announced by the executive president of the Central Bank of Oman, Hamood Sangour al-Zadjal, not to join the proposed Gulf Co-operation Council (GCC) single currency. This represents a shift from Oman's original position, which was to delay joining the currency until after 2010. The authorities have resisted pressure to revalue the riyal, insisting that the peg will remain in place for the foreseeable future. Omani lending rates are forecast to average around 7.4% a year in 2011-12.

Download the numbers in Excel

Growth figures released by the Ministry of National Economy for 2009 put real GDP growth at 1.1%. We have increased our 2010 growth estimates to 4.5% of GDP based on the significant increase in oil production, which stood at 865,000 b/d, owing to EOR techniques. We forecast that growth will increase to 4.7% in 2011 on the back of higher oil prices fuelled by the regional unrest and will rise further to 5% in 2012 owing to a rise in private and government consumption as well as increased spending.

The Omani economy will remain vulnerable to any downturn in domestic oil production and to fluctuations in oil and gas export prices. GDP growth will continue to rely on the hydrocarbons sector, but as oil extraction becomes increasingly difficult and expensive, the diversification programme will become more important. Oil and gas accounted for just over 40% of GDP in 2009 (compared with just over 50% in 2008). Liquefied natural gas (LNG) production will rise modestly over the forecast period, but insufficient gas reserves mean that even with plans for a fourth LNG train, exports will remain subdued. The expansion of ports, the diversification into manufacturing such as aluminium and the development of tourism infrastructure will boost non-oil exports. A major downside risk to our growth assumptions is the escalation of protests in the sultanate and the shortage of gas supplies; gas is used in EOR, desalination and electricity generation for heavy industries such as aluminium and fertilisers.

We estimate that consumer price inflation averaged 3.4% in 2010. Oman imports the majority of its food products. An expansionary fiscal policy and a rise in the prices of basic food items, such as wheat, and industrial raw materials will contribute to an increase in prices. Inflation is forecast to rise to 4.1% in 2011 but to fall to 3.9% in 2012 as prices stabilise. Inflation in the forecast period is expected to be much lower than in 2007-08, when it averaged 9.2%. However, it remains high by Omani standards. Consumer prices are constrained by the government's extensive subsidy system, which holds in check the prices of a range of core goods and services.

Oman's fixed exchange rate of OR0.385:US$1 is unlikely to come under pressure in 2011-12. The Central Bank remains firmly committed to the peg, which it has maintained since 1986. The outlook for Oman's external accounts and foreign asset levels is still sufficiently robust to enable the Central Bank to defend the peg. Oman's decision not to join the planned GCC currency union also means that the peg is less likely to be adjusted in response to any revaluations of the currencies of the other Gulf countries.

Having widened substantially in 2010, the trade surplus is expected to increase further in 2011, buoyed by higher oil prices, but will narrow in 2012 as oil prices fall and production increases modestly. Exports are forecast to grow by an average of 9.1% in 2011-12, boosted by higher oil prices and the continued development of Oman's sea ports, which will increase re-export trade. Imports will also grow strongly in 2011-12. The trade surplus is forecast to widen to US$18.1bn in 2011, before falling to US$17.4bn in 2012.

The services deficit is forecast to widen in 2011-12, despite plans by the government to develop infrastructure to attract tourists. Any increase in tourism receipts will be offset by a rise in payments to cover the cost of EOR projects. We forecast that the non-merchandise deficit will widen to an average of US$15.8bn in 2011-12. The current transfers deficit will increase to an average of US$5.5bn in 2011-12. The income deficit is likely to widen, in part because of a rise in interest payments on Oman's external debt. The current account moved from a deficit in 2009 to an estimated surplus (of 3.6% of GDP) in 2010. The surplus is forecast to widen in 2011 before narrowing in 2012, averaging 3.1% over the forecast period.

Download the numbers in Excel

The wave of protests that has spread through the Middle East since mid-December broke over Oman in late February, resulting in the death of at least one protester and destruction of property in Sohar. The February protests began with a peaceful demonstration in the ministries' district of the capital, Muscat, on Friday February 18th. It was dubbed the second "Green March", after a similar march in mid-January. Estimates for the number of protesters ranged from 300 to 800, larger than in January, but small in comparison with protests elsewhere in the region. Marchers carried placards and chanted slogans demanding an increase in the minimum wage in both private and public sectors, action on rising prices, further "Omanisation" of jobs, and more power for the Majlis al-Shura (Consultative Council, an elected advisory body). Significantly there were also placards of support for the sultan. The protesters signed a petition to the sultan asking him to address their grievances, which the official Oman News Agency later reported had been delivered. The march seems to have been organised at least partly on a dedicated page of the social networking site, Facebook.

A week later, on February 25th, demonstrators gathered after Friday prayers in Sohar, 200 km north-west of Muscat on the Batinah coast, and in the southern town of Salalah, 1,000 km from Muscat. In Sohar protesters gathered at the Globe Roundabout, on the main Muscat to UAE highway. By Saturday 26th the number of protesters had reached 1,500-2,000, and trucks had been commandeered to block the road, paralysing the most important route in the country. Graffiti was sprayed on the large globe sculpture after which the roundabout is named, and the police made a number of arrests. Overnight, riot police used tear gas to clear a small group of remaining protesters and reopen the road, but on the morning of Sunday 27th the protesters returned and marched on the nearby police station to demand the release of those arrested. A fuel tanker, the police station, the home of the wali (the local governor), and a number of police and government vehicles were set on fire and the Ministry of Manpower office ransacked. Riot police responded by opening fire with tear gas and rubber bullets, causing the death of at least one protester (the official death toll), although there have been claims that up to six people were killed and 35 people injured.

Later the same day, the sultan sent the minister for the Diwan of the Royal Court, Ali bin Hamoud al-Busaidi (the sultan's personal minister and a member of his extended family), to Sohar to meet the protesters and listen to their demands. According to an English-language newspaper, Muscat Daily, they included a minimum monthly salary for Omanis of OR500 (US$1,298), writing off loans, facilitating further bank loans, holding corrupt officials accountable, and bringing those responsible for the deaths and injuries of protesters to justice. That night a Lulu hypermarket, adjacent to the Globe Roundabout, was looted and gutted by fire. Even more worrying for the authorities, by the morning of Monday February 28th, the road to Sohar's flagship industrial port had been partly blockaded by a second group of demonstrators. A group of local residents organised a protest against the violence and damage to property. The authorities closed the border with the UAE at both Hatta and Wajajah, not least because the main road to Muscat was blocked. Overnight the army was sent in to regain control, but apparently with orders to avoid the use of force. A helicopter was used to drop tear gas to disperse the crowd at the Globe Roundabout but despite this, they returned. By Wednesday March 2nd an uneasy peace had broken out in the town, with the protesters peacefully controlling the Globe Roundabout, and directing traffic away from it. The authorities will no doubt be asking themselves why the protests turned violent in Sohar. Sohar is the largest town in Al Batinah, the most populous region of Oman. As elsewhere in the country, there are a large number of young people looking for jobs, and in Sohar many have had their expectations raised by the founding of a private university. There has been enormous investment in the town over the last ten years, with the creation of a port and associated industrial complex with an aluminium smelter as part of Oman's push to diversify its economy away from oil, and, ostensibly to create jobs for Omanis. In reality, many of the jobs, both skilled and unskilled have gone to expatriates whose numbers in the town have increased considerably over the last five years.

By contrast, the protest in Salalah outside the governor of Dhofar's office remained peaceful. Although their numbers were initially small and consisted largely of young men, over the coming days, numbers grew to about 100 including older men and, at one point, a group of lawyers. By March 2nd, there had been reports of unrest in the northern towns of Shinas, Al Buraymi, Yanqul, Al Khaburah and Ibri.

The sultan and his government responded to demonstrations at the end of February with a series of royal decrees aimed at satisfying the protesters while in effect maintaining the status quo. Many of the initiatives involved throwing money at the problem, as other Gulf states have been doing with varying degrees of success. In the middle of February, three days before the second Green March in Muscat, the minimum wage for Omanis was increased by 43%, from OR120 (US$312) per month to OR200 with effect from March 1st. It is likely that this was an unsuccessful attempt to head off the forthcoming protest which was being organised on Facebook and other social media. A royal directive was issued on February 27th, shortly after the Sohar demonstrations began, that 50,000 registered jobseekers would be found jobs in the public and private sectors, and that all jobseekers who had been registered by February 27th would receive a monthly allowance of OR150 with effect from March 1st. On February 28th a rule freezing social security payments to families where a member had a job was overturned.

Perhaps the most significant change was introduced on March 7th, in response to demands that the Majlis al-Shura be given more powers. The sultan initiated a major cabinet reshuffle in which 12 ministers were replaced, including key portfolios of commerce and industry, the interior and national economy. This was the third reshuffle in less than two weeks, the previous two merely being an exercise in recycling old faces. The third reshuffle is significant in that five of the new ministers appointed to the cabinet are from the current Majlis al-Shura. In addition, two other Majlis al-Shura members were appointed as chairmen of the State Audit Institution-now known as the State Financial and Administrative Audit Institution, in an indication that the body's powers will be increased-and the Tender Board. The appointments go a long way in addressing the issue of corruption as both the audit bureau and the tender board have been perceived to have turned a blind eye to corrupt practices. In reshuffling the cabinet, the sultan dissolved the Ministry of National Economy altogether and removed its minister, Ahmed bin Abdulnabi Macki, who has been the specific target of some protesters. The sultan also ordered the creation of a ministerial committee to consider widening the powers of the Consultative Council, which currently operates only in an advisory capacity and does not have legislative powers. The public prosecution is also to become independent. The Majlis al-Dawa (State Council, the appointed chamber) issued a statement acknowledging the legal right of citizens to conduct peaceful demonstrations enshrined in the Basic Law of the state, but condemned the violence and destruction of property. The peaceful nature of the first two Green Marches held in Muscat in mid-January and mid-February was commended by the council. One of the consistent demands of protesters has been an end to corruption and wasta, the local term for influence, which is all important in Oman. The cabinet reshuffle will certainly go some way towards addressing this issue.

Having inherited a civil war in Dhofar when he came to power in 1970, this is not the most serious crisis of the sultan's reign. However, since then Oman has become known as one of the most peaceful countries in a troubled region. Although the majority of demonstrators appear to remain loyal to the sultan, the events of late February must have come as a nasty shock to him, especially after months of celebrations for his 40th anniversary in 2010. For many years there has been concern that he has been surrounded by those who only tell him what they think he wants to hear. It is impossible to predict exactly how far-reaching the impact of the demonstrations in Oman will be in the long-term. However, at the very least, the dam of freedom of speech has been breached and it is hard to imagine that process being reversed.

Employment

Forty years ago nearly all Omanis did hard physical work in difficult conditions as a matter of survival in a subsistence economy. In the early 1970s, in an understandable rush to develop, construction companies imported many thousands of Asian labourers. Over the next 25 years such work came to be regarded as menial, and Omanis began employing Asians to do housework and to work on their farms. Of the 956,000 expatriates legally employed in the private sector at the end of 2010, over 400,000 were employed in construction, 93,000 in private households, and 63,000 in agriculture; 73% have no secondary education.

The most common small business model over the last 30 years has involved Omanis, often those with public-sector jobs or pensions, employing cheap Asian labour, not locals. Expatriates are prepared, or sometimes forced, to work long hours for low pay making them more attractive employees. At the end of 2010, 126,000 expatriates were employed in the wholesale and retail trade, and repairing vehicles and household goods, all typical small businesses.

The government has tried to address the problem with "Omanisation" quotas. Those companies with high-level contacts find ways to circumvent the targets or use their influence to acquire additional labour clearances for expatriates. In the white collar sector, expatriates are given no incentives to train their Omani counterparts. Few would actively work themselves out of a job. As a result, many Omanis are not encouraged, properly trained, or given responsibility and therefore quickly become disillusioned, often resulting a vicious circle of lack of achievement.

According to the most recent statistics available, in 2008 the average salary for the 147,000 Omanis then in the private sector was just over OR200 (US$520) per month. Over one-third were paid the minimum monthly wage of OR120, while nearly 87% received less than OR300. Interestingly the statistics for wages for the expatriate workforce are not available, but those doing manual work either for contractors, or on farms and in homes are often paid OR50/month or less.

Employers, both large and small, want to use expatriate labour because it is cheap. The recent 43% increase in the minimum wage for Omanis employed in the private sector is likely to make Omanis even less attractive to employers.

Plans for Oman's third oil refinery, at Duqm, look likely to be approved in the next few months. The refinery is part of ambitious plans, begun in 2006, to transform a remote fishing village into a major port and petrochemical complex with a population of 100,000 by 2025. The refinery plans were put on hold in November 2008 as the global economic crisis caused project finance to dry up. However, a year later Oman Oil Company signed a Memorandum of Understanding with Abu Dhabi's state-run International Petroleum Investment Company and a second feasibility study was launched, due to be submitted in the next three months. The Ministry of National Economy's Duqm project adviser, Maurice Girgis, speaking at the Oman Construction Summit in late January, said that all the indicators were good for the refinery, which is expected to have a capacity of 300,000 barrels/day, making it the largest in Oman. According to Mr Girgis, a final decision on the refinery will pave the way for progress to be made on plans for an associated petrochemical complex. He cited job creation as one of the main reasons for government investment in Duqm.

In late February the commerce and industry minister at the time, Mr Sultan, announced that the government had formed a new state-owned company, Oman Oil Refineries and Petroleum Industries. The new company has been created to manage two state-owned petrochemical companies, Oman Polypropylene and Aromatics Oman, both based in Sohar, together with the country's two oil refineries. The refineries, which are at Sohar and Mina al-Fahal in Muscat, were merged in 2007 to form the Oman Refineries and Petrochemicals Company. Oman Aromatics began commercial production in February 2010 and takes nearly 30% of its main feedstock from the adjacent Sohar Refinery. The plant has the capacity to produce 1m tonnes of aromatics a year, 80% paraxylene and the remainder benzene. Oman Polypropylene also takes its feedstock from Sohar Refinery. The plant, which has the capacity to produce 340,000 tonnes/year, began production in mid-2006. According to Mr Sultan, the purpose of the restructuring was to improve profitability, and create improved job opportunities for locals to work in the industry. The announcement was made just a week before violent protests calling for more jobs were held in Sohar, where three of the four plants are located.

Oman's premier oil company, Petroleum Development Oman, held its annual media briefing in late February. It was the first given by new managing director, Raoul Restucci. PDO's production of crude oil for 2010 averaged 553,000 barrels/day (b/d), well within its target range of 540,000-560,000 b/d, but only a disappointing 1,000 b/d more than average daily production for 2009. This was in part due to the delay in the commissioning an enhanced oil recovery (EOR) project at Harweel, which had been scheduled for mid-2010. Although the production of crude oil has changed little, the amount of condensate increased by 7% year on year to 95,000 b/d in 2010. The most significant increase however was gas production, which rose by 9% from an average of 410,000 barrels oil equivalent/day (boe/d) in 2009 to 446,000 boe/d. Gas now accounts for more than 40% of PDO's production. The briefing document emphasises that in 2010 gas availability to PDO's customers was 100%; in other words, customers were always able to call on their contracted volumes of gas. This should be welcome news to the government, as there have been concerns for some time about gas demand outstripping supply. Overall, PDO's total production of hydrocarbons increased by 4% year on year in 2010, to 1.09m boe/d. Mr Restucci said that PDO is committed to a long-term oil-production target of 550,000 b/d for the next few years, while total hydrocarbons production is expected to rise to 1.2m boe/d by 2014.

PDO is investing heavily in EOR projects to help maintain production of crude oil in its mature and geologically complex oil fields. Mr Restucci acknowledged that the company's flagship EOR projects, each of which is expected to contribute an additional 40,000 b/d to production, have experienced delays. At Harweel, a miscible gas project involves gas being injected into the oil reservoir under high pressure. The oil dissolves in the gas and the mixture moves more easily through the rock to be extracted through producing wells. Harweel is now expected to start producing oil in the second quarter of 2011. At Qarn Alam, a steam-assisted gravity-drained project has also experience delays. The first steam stages are now expected in October 2011. PDO has become, of necessity, a pioneer of EOR techniques; it is therefore hardly surprising if technological challenges have contributed to delays. This will no doubt be of little comfort to the government, who are primarily interested in increasing production and seeing a return on the large sums of money being invested in EOR. It is fortunate for Oman that high oil prices in recent years have made this production economically viable. PDO policy on future EOR projects changed during 2010 as plans for a thermal project at Thayfut, and miscible gas injection at Budour North-east, were scrapped in favour of lower-energy solutions of polymer injection and water flooding respectively.

Mr Restucci outlined oil and gas discoveries made by PDO during 2010, which potentially total over 800m boe. A large gasfield was discovered, together with four new oilfields. The most significant of these is at Amal South-east which could contain over 300m barrels of oil. It is near to the existing Amal oilfield where Oman's latest EOR project is under development. The oil discovered is viscous, and most production will therefore require EOR as part of the Amal steam-injection project. Oil discoveries were also made at Sayyah, Al Ghubar East, and Aqeeq. The gasfield was discovered at Khulud West. Although considered significant, the find, like much of Oman's gas, is what is described as "tight" gas, at high pressure and temperature, and with low permeability, making it hard and expensive to exploit.

Download the numbers in Excel

Download the numbers in Excel

Download the numbers in Excel

Please see graphic below

Please see graphic below

Please see graphic below

Land area

309,500 sq km

Population

2.87m (2008 Ministry of National Economy mid-year estimate), including 900,000 expatriates

Main regions

Population (2008)

Muscat (capital): 834,760

Dhofar: 273,052

Al Batinah: 760,454

Al Dhahirah: 258,567

Al Sharqiyah: 367,966

Musandam: 35,473

Al Dakhiliyah: 308,730

Al Wusta: 28,426

Climate

Coastal areas, especially Batinah and Muscat: very hot and humid in summer; winters mild. Interior desert: summers hot and dry; winters cool. Dhofar receives monsoon rains in June-September

Weather in Muscat (altitude 5 metres)

Hottest month: June, 31-38°C (average daily minimum and maximum). Coldest month: January, 20-25°C. Driest months: July and August, 1 mm average rainfall. Wettest month: January, average rainfall 28 mm, but considerably higher on Hajar mountains in the interior

Languages

Arabic; English, Urdu, Baluchi and Swahili are also widely used

Measures

Metric system

Currency

Omani riyal (OR) = 1,000 baisa. The currency is pegged to the US dollar at OR0.3845:US$1

Time

4 hours ahead of GMT

Public holidays

The Islamic holidays—Eid al-Fitr (end of Ramadan, August 30th 2011), Eid al-Adha (Feast of the Sacrifice, November 6th 2011), Islamic New Year (November 26th 2011) and Mawlid al-Nabi (the birthday of the Prophet, February 15th 2011)—are public holidays, the dates of which vary according to the lunar calendar and are therefore approximates. New Year's Day (January 1st), National Day and birthday of Sultan Qaboos (November 18th), and New Year's Eve (December 31st) are also public holidays

Official name

Sultanate of Oman

Form of state

Monarchy

Legislature

There is no national legislature. The Council of Oman debates policy but does not legislate. It comprises the 83-member Majlis al-Shura (Consultative Council), which was elected by universal suffrage in 2007-the next election is in October 2011-and the Majlis al-Dawla (State Council), whose members were appointed in November 2007

Head of state

Qaboos bin Said al-Said assumed power in July 1970

Executive

The sultan rules by decree, assisted by the Council of Ministers (cabinet). The most recent cabinet reshuffle was in September 2007

Main political parties

Political parties are not permitted

Adviser of the sultan

Shihab bin Tariq al-Said

Personal representative of the sultan

Assad bin Tariq al-Said

The government

Prime minister, minister of defence, finance & foreign affairs: Qaboos bin Said al-Said

Deputy prime minister for cabinet affairs: Fahd bin Mahmoud al-Said

Key ministers

Agriculture & fisheries: Fuad bin Jaafar bin Mohammed al-Sajwani

Awqaf & religious affairs: Abdullah bin Mohammed al-Salimi

Commerce & industry: Saad bin Mohammed bin Said al Saadi

Defence affairs: Badr bin Saud al-Busaidi

Diwan of the Royal Court: Khalid bin Hilal al-Busaidi

Education: Madiha bint Ahmed bin Nasser

Environment & climate affairs: Mohammed bin Salim bin Said al-Toobi

Foreign affairs: Youssef bin Alawi bin Abdullah

Health: Ahmed bin Mohammed al-Sa'eedi

Heritage & culture: Haithem bin Tariq al-Said

Higher education: Rawya bint Saud al-Busaidi

Housing: Saif al-Shabibi

Information: Hamed bin Mohammed al-Rashdi

Interior: Sayyid Hamoud bin Faisal al-Busaidi

Justice: Mohammed bin Abdullah al-Hinai

Legal affairs: Abdullah bin Mohammed al-Sa'eedi

Manpower: Abdullah bin Nasir al-Bakri

Oil & gas: Mohammed bin Hamad al-Rumhi

Regional municipalities & water resources: Ahmed bin Mohammed al-Shuhi

Social development: Mohammed bin Said bin Saif al-Kalbani

Sports affairs: Ali bin Masoud al-Sunaidy

Tourism: Abdulmalik bin Abdullah bin Ali al-Khalili

Transport & communications: Ahmed bin Salim al-Futaisi

Central Bank executive president

Hamood Sangour al-Zadjal