Overview
The regulatory environment governing Oman’s energy sector has undergone significant reform under Vision 2040. Key legislative changes include the Foreign Capital Investment Law (2019), updated Commercial Companies Law, and sector-specific regulations aimed at improving ease of doing business. Oman’s ranking in the World Bank Doing Business index improved notably, though further regulatory modernisation is needed.
Key Indicators
| Indicator | Current | 2040 Target |
|---|---|---|
| Primary Regulator | Sector ministry | Enhanced governance |
| FDI Framework | Open with conditions | Fully liberalised |
| Licensing Complexity | Moderate | Streamlined |
Analysis
Regulatory reform in the energy sector balances investor attraction with national interest protection. The sector’s regulatory framework is administered by relevant ministries with oversight from the Supreme Council for Planning. PDO, OQ Group, Shell, BP, TotalEnergies, OPAL operate within a licensing regime that has been progressively simplified. The introduction of the Invest Easy portal has reduced business setup time from weeks to days. However, inter-agency coordination remains a bottleneck, with overlapping mandates between sector regulators and cross-cutting bodies like the Environmental Authority and Labour Ministry.
Challenges
Regulatory complexity and enforcement inconsistency remain key concerns. 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. Additionally, the pace of regulation often lags behind technological and market developments, creating uncertainty for first movers.
Opportunities
Regulatory sandboxes, digital permitting platforms, and outcome-based regulation can unlock growth. 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.