Overview
Oman’s energy sector remains the backbone of the national economy, contributing approximately 45 percent of GDP as of 2019. Petroleum Development Oman (PDO) produces roughly 900,000 barrels per day, while OQ Group anchors downstream operations including refining, petrochemicals, and methanol. Vision 2040 seeks to reduce hydrocarbon dependence to below 20 percent of GDP through diversification into renewables, green hydrogen, and downstream value-added manufacturing.
The value chain for Oman’s energy sector encompasses upstream inputs, midstream processing and logistics, and downstream distribution and export channels. Mapping this chain reveals critical nodes where value addition can be maximised and leakage to imports can be reduced.
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 |
Analysis
The energy value chain in Oman is characterised by significant upstream concentration, with PDO, OQ Group, Shell, BP, TotalEnergies, OPAL dominating primary production. Midstream processing and logistics represent the largest opportunity for value capture, as much of the raw output is currently exported with minimal transformation. Investment of USD 25 billion FDI stock in upstream alone signals strong commitment to building out downstream capacity. The sector employs ~55,000 direct, ~120,000 indirect workers, though value-chain deepening could multiply employment effects significantly.
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.