Overview
The outlook for Oman’s energy sector to 2040 is shaped by Vision 2040’s ambitious diversification agenda, global megatrends, and sector-specific dynamics. With a current GDP contribution of ~45% (2019) and a target of <20%, the sector must achieve transformative growth while navigating structural challenges and competitive pressures from GCC peers.
Key Indicators
| Indicator | Current | 2040 Target |
|---|---|---|
| Crude Production | ~900,000 bpd | Maintain 800-900k bpd |
| GDP Contribution | ~45% | <20% by 2040 |
| Omanisation Rate | ~72% | 90%+ by 2040 |
| Renewable Share (Electricity) | ~2% | 30% by 2040 |
| Green Hydrogen Capacity | Pilot stage | 25 GW+ by 2040 |
Scenario Analysis
Base Case (60% probability): Steady reform implementation drives gradual growth. The sector reaches <20% GDP contribution by 2038-2040. Investment of USD 25 billion FDI stock in upstream alone is largely deployed. Omanisation targets are substantially met. Key risks are managed but not eliminated.
Upside Case (25% probability): Accelerated reform, strong oil prices funding transition investments, and successful technology adoption propel the sector beyond targets. International investment exceeds expectations. Oman emerges as a GCC leader in select sub-segments.
Downside Case (15% probability): Reform fatigue, prolonged low oil prices, or regional instability slow progress. The sector achieves only 60-70 percent of Vision 2040 targets. Skills gaps and infrastructure delays compound.
Challenges
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.
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.