A plunge in commodity prices across the globe has severely affected the country’s export revenue this year.


Exports of crude oil, petroleum products and liquefied natural gas nosedived by 36.5 per cent to RO2.83 billion in the first four-month period of 2015.

Non-oil exports plunged by 20 per cent to RO1,007.8 million for the first four-month period.

The Sultanate’s competitive edge lies in products like minerals, petrochemical and plastics, fish and agricultural products.

The industrial activities contributed 18.1 per cent in the gross domestic product of Oman in 2014.

After the massive development of Sohar industrial area that attracted over $20 billion investment, now the focus is on Duqm.

Since the Sultanate’s exports are predominantly either commodities or commodity-based petrochemical products, revenues from overseas markets took a beating. Other Gulf countries are also facing a similar situation, along with other major economic powers.

This was evident from the plunge in export revenues in the first four months of 2015, which fell by 32.9 per cent to RO4.53 billion from RO6.76 billion for the same period last year. The fall in export revenue was mainly on account of a dip in oil and gas prices in international markets and re-exports. The average price of Oman Crude dipped by 43.7 per cent to $59.3 per barrel for the first half of this year from $105.38 a barrel for the same period of 2014, according to latest statistics released by the National Centre for Statistics and Information (NCSI).

As a result, exports of crude oil, petroleum products and liquefied natural gas nosedived by 36.5 per cent to RO2.83 billion in the first four-month period of 2015 from RO4.46 billion in the same period last year. Of this, crude oil exports alone showed a 38.6 per cent fall, while liquefied natural gas exports were down by 18.5 per cent. The Sultanate produced 175.67 million barrels of crude oil in the first half of 2015, up by 2.9 per cent over the same period last year.

Likewise, non-oil exports plunged by 20 per cent to RO1,007.8 million for the first four-month period from RO1,260 million, which was against a target of 15 per cent growth for this year. Re-exports also showed a drastic fall of 32.8 per cent to RO694.4 million from RO1,034.1 million during the four-month period under view. But the fall in total exports last year was modest at 5.7 per cent at RO20.46 billion, from RO21.70 billion for the previous year.

Exports of crude oil, petroleum products and liquefied natural gas plunged by 6.7 per cent to RO13.39 billion in 2014 from RO14.35 billion in the previous year. Of this, crude oil exports showed a 6 per cent fall, while liquefied natural gas exports were down by 10.6 per cent. The country produced 344.37 million barrels of crude oil last year, of which 292.16 million barrels were exported.

However, non-oil exports surged ahead 8.4 per cent to RO4.12 billion for 2014, against RO3.81 billion witnessed in 2013, according to NCSI data. But it was much lower than the growth target set by the country’s export development agency for last year. Oman’s leading market for non-oil exports this year is the United States, which imported non-oil Omani goods worth RO206.4 million for the first four months. The Sultanate’s non-oil exports to Saudi Arabia showed a fall of 18 per cent, compared to the previous year.

However, Oman’s leading market for non-oil exports last year was the United Arab Emirates (UAE), which imported non-oil Omani goods worth RO776 million. The Sultanate’s non-oil exports to the UAE showed a robust 17.9 per cent growth last year, over the previous year.

Pakistan was the second leading importer of Oman’s non-oil products, which is following by Saudi Arabia, India and the United States of America (USA).

Higher exports from gas-based industries, especially aluminium smelter, petrochemicals, fertiliser and iron and steel plants are helping the Sultanate to enhance its non-oil export base. The country’s export development agency Public Authority for Investment Promotion and Export Development (popularly known as Ithraa) is taking several initiatives to enhance non-oil exports. These programmes include visits of trade delegation, participation in international exhibitions, business-to-business meetings and market studies to find acceptance of Omani products in potential export markets.

After conducting a series of Omani products exhibitions in major regional markets, the Sultanate is focusing on Iran, Singapore, Ethiopia, Tanzania and few West African countries.

Ithraa has conducted a series of Omani product exhibitions since 2012 to raise non-oil exports from the country in the Gulf region and has drawn growing participation with each passing year. For instance, as many as 120 companies participated in the recent Omani products exhibition in Jeddah, with 100 Omani firms taking part in a Dubai exhibition in 2014. The exhibition in Jeddah aimed at presenting an ultimate platform to introduce high quality Omani products to the visitors.

Also, 60 companies from Oman attended the first Omani products exhibition in Riyadh in 2012 and 65 per cent of participating firms secured contracts, while 85 companies took part in an exhibition in Qatar the following year and 70 per cent of the participating firms signed new business deals.

Apart from trade exhibitions, the agency also organises business-to-business meet, trade visits and participation in major trade exhibitions. All these initiatives are helping the country’s large and small and medium enterprises to enhance export revenue. Now, Oman is seriously considering raising its non-oil exports to Ethiopia by holding a high-profile exhibition in the country early next year, which was followed by a detailed market study.

The Sultanate, which exported goods and services worth $40 million to Ethiopia in 2014, plans to hold an Omani products exhibition in Addis Ababa in April 2016. Oman’s imports from Ethiopia are pegged at around $5 million, reflecting a favourable bilateral trade for Oman.

Ithraa had conducted a market study in Ethiopia to assess the export potential and local acceptance of 59 Omani products. The survey was based on different sectors, such as foodstuffs, building material, furniture, marble, stones, textiles and vegetables. The study was also conducted to find the consumption pattern, demand and logistics patterns for these sectors.

The Ethiopian market’s potential is huge as the country’s total exports are $5.7 billion, while its imports stand at $22 billion last year. Its main trading partners are China, Saudi Arabia and the United States and now Oman is trying to penetrate the market with its quality products. The Ethiopian economy is growing at a rapid pace, with its gross domestic product pegged at $54 billion, and its per capita income estimated to be $568 in 2014.

The Sultanate’s competitive edge lies in products like minerals, petrochemical and plastics, fish and agricultural products and the country exports to 140 countries across the world. The perception of better quality for Omani products is also an added advantage. Oman is also trying to utilise Greater Arab Free Trade Area (Gafta) and focus on neighbouring Arab countries by organising exhibitions and matchmaking meetings. However, the ability of Omani companies to compete in export market has taken a beating with the recent increase in the price of natural gas sold to industries located within the industrial estates.

Oman government doubled natural gas price to 41 baisas per standard cubic meter from 20.5 baisas with effect from January, 2015 and an annual increase of 3 per cent thereafter. The impact is more on natural gas intensive industries like cement, ceramic tiles, steel and glass manufacturing since a sizable portion of their manufacturing cost is for fuel.

Another major strategy of the government is to make the country’s port a redistribution hub for the region, which will help enhance re-exports. The four major ports – Sohar, Salalah, Muscat and Duqm – are in different stages of expansion or redevelopment/conversion for catering to different needs of the country.

Also, having well connected ports and linkage to hub ports in the region is essential for Oman in order to be a logistics gateway. And the strategic location of Oman’s major ports is expected to give the much-needed competitive advantage for the ports to be a hub to cater to the transshipment needs of the region, rivaling neighbouring countries. Salalah is mainly engaged in transshipment, Sohar for shipment of industrial products and containerised shipping, Duqm for general cargo and Muscat for tourists.


The Sultanate’s industrial production, which mainly includes mining, quarrying and manufacturing, fell by 3.6 per cent to RO667.6 million for the first quarter of this year, against RO692.5 million for the same period last year. But the overall industrial activity fell by 2.4 per cent to RO1,115.8 million for the first quarter of 2015 from RO 1,142.7 million, mainly on account of a slowdown in the economy in the aftermath of plunge in oil prices. Oman’s industrial sector largely depends on export market for growth, especially the Gulf and larger Middle East region, in view of a limited domestic market. In fact, the industrial activities contributed 18.1 per cent in the gross domestic product of Oman in 2014. However, the contribution of manufacturing sector alone was around 10 per cent.

Oman is now pinning hope on small and medium industries in playing an important role in strengthening its export base. As part of the initiative, the government has devised a comprehensive programme, especially incentives for small and medium entrepreneurs and massive investments in industrial estates and free trade zones in different parts of the country.

The country’s industrialisation drive was mostly facilitated by the Public Establishment for Industrial Estate (PEIE), which manages more than six industrial estates spread across the country. PEIE, which acts as a one-stop-shop for new entrepreneurs, manages Rusayl, Raysut, Sohar, Sur, Nizwa and Buraimi.

The expansion programmes of some of the gas-based industries at Sohar, the Sultanate’s major industrial zone, are expected to further strengthen non-oil sectors in the near future. For instance, the state-owned Oman Refineries and Petroleum Industries (Orpic) is planning to further boost the industrial base in Sohar with another petrochemical complex. Orpic is progressing with its plans to build Liwa Plastics Project (LPP). With the completion of LPP, Orpic will be producing a total of 1.4 million tonnes of polyethylene and polypropylene a year by 2018 – all for export market. The Sohar Refinery Improvement project will also support petrochemical production. The commissioning of a steel melt shop last year by Jindal Shadeed was also a shot in the arm for the government to strengthen non-oil exports. Jindal Shadeed Iron & Steel, part of the $12 billion-Indian steel conglomerate Jindal group, has commissioned its two million tonne per annum (MTPA)-capacity steel melting shop within its large complex in Sohar last year. The steel melting shop, which was set up with a capital expenditure of $400 million, will produce billets, blooms and round products, mainly for regional markets.

The development of a host of industries, including Sohar Aluminium, Sohar International Urea and Chemical Industries, Aromatics Oman, Vale Oman, Oman Polypropylene, Shadeed Iron and Steel, Oman Methanol and L & T Modular Fabrication Yard, is a manifestation of the involvement of foreign multinationals in the country’s industrialisation drive, be it as a technological partner or a joint venture investor. This also reflects the level of confidence among some of leading international giants like Brazilian mining conglomerate Vale in Oman. The government’s commitment in developing a vibrant industry is evident from the fact that these industries are partly promoted by Oman Oil Company (OOC) – the investment arm of the government.

The growth witnessed in the petrochemicals, aluminium, steel and mining segments may slowdown in the short run due to lack of enough natural gas for expansion programmes. However, once BP starts gas production from its new block, these industries will commence their proposed expansion, which will give the much-needed fillip to the country’s industrialization and export growth, besides attracting foreign direct investment.

After the massive development of Sohar industrial area that attracted over $20 billion investment, now the focus is on Duqm. A series of major industries, including a large refinery and petrochemical complex, are taking shape in the newly emerging port city. The development of the port will boost the Sultanate’s exports of mineral products and petrochemicals. Oman Oil Company alone is investing $15 billion for developing various projects, including a mega refinery at Duqm.

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