Overview
Investment in Oman’s energy sector totals USD 25 billion FDI stock in upstream alone, reflecting both sovereign and private capital deployment. The sector’s GDP contribution of ~45% (2019) is targeted to reach <20% by 2040, requiring sustained capital inflows across the investment pipeline. Deal flow has accelerated since 2020 with Vision 2040 providing a clear policy framework for investor confidence.
Key Indicators
| Indicator | Current | 2040 Target |
|---|---|---|
| Total Investment | USD 25 billion FDI stock in upstream alone | Growing |
| GDP Contribution | ~45% (2019) | <20% |
| Key Investors | PDO, OQ Group, Shell, BP, TotalEnergies,… | Diversifying |
Analysis
The investment landscape for energy in Oman is shaped by a combination of government-led strategic investments and growing private sector participation. PDO, OQ Group, Shell, BP, TotalEnergies, OPAL represent the core investor base, with increasing interest from international institutional investors and sovereign wealth funds. The Oman Investment Authority (OIA) has prioritised the sector in its portfolio rebalancing strategy. Foreign direct investment is facilitated through free zones, tax incentives, and streamlined licensing processes. However, deal sizes remain modest compared to UAE and Saudi equivalents, suggesting room for growth.
Challenges
Capital mobilisation faces headwinds from oil price volatility, reserve depletion risk, high breakeven cost (~usd 75/bbl), slow progress on enhanced oil recovery, and the need to pivot toward green hydrogen at scale.
Opportunities
Green hydrogen mega-projects (HYPORT Duqm, 25 GW), solar irradiance advantage (>2,000 kWh/m2/yr), carbon capture and storage potential in depleted reservoirs, and downstream petrochemical expansion. Green and sustainable financing instruments (sukuk, green bonds) represent an emerging channel for sector investment.
Vision 2040 Targets
Reduce hydrocarbon GDP share to below 20 percent; achieve 30 percent renewable energy in the electricity mix; become a top-three global exporter of green hydrogen by 2040; increase Omanisation to 90 percent.