In many ways, Oman is atypical of Persian Gulf oil producers. Oil was not discovered in commercial quantities until 1962 - decades after most of Oman's neighbors.
Oman's oil fields also are generally smaller, more widely scattered, less productive, and more costly per barrel than in other Persian Gulf countries. The average well in Oman produces about one-tenth the volume per well compared to neighboring countries. Oman continues to use a variety of enhanced oil recovery (EOR) techniques in order to minimize the costs of exploration and further development at new and existing oil fields. Using these technologies, Oman has succeeded in bringing down the cost of oil production to $3 per barrel in some fields and $4 per barrel in others - but these figures, while still low by world standards, are substantially above most other Persian Gulf oil fields.
Oman is not a member of the Organization of Petroleum Exporting Countries (OPEC) or the Organization of Arab Petroleum Exporting Countries (OAPEC).
Most of Oman's 5.28 billion barrels in proven oil reserves are located in the country's northern and central regions. In the North, the Yibal, Natih, Fahud, al-Huwaisah and Lekhwair fields combined account for almost half of total Omani oil production. Yibal, which produces around 180,000 bbl/d, is the largest oil field in the country. Crude oil found in this region is mainly medium or light, with gravities in the 32o-39o API range. Northern oil is mostly found along with natural gas. Heavier oil is found in southern Oman, particularly in the Nimr and Amal fields, with gravities averaging 20o API, and normally not associated with natural gas. Oman's main oil export blend is a medium sour crude.
Petroleum Development Oman (PDO), the country's second-largest employer after the government, holds over 90% of the country's oil reserves and accounts for about 94% of production. PDO is a consortium comprised of the Omani government (60%), Shell (34%), Total (4%), and Partex (2%). However, Shell operates most of Oman's key fields, including Yibal and Lekhwair. As part of a strategy to increase its oil reserves, PDO has set out to develop additional exploration and recovery techniques. PDO aims to increase the amount of oil it recovers to 34% (from 27% in early 1998). Recent exploration has been successful in southern Oman, where PDO reportedly discovered 2 major oil fields, at Al-Noor and Al-Shomou, with an estimated combined 340 million barrels of reserves. PDO hopes to increase reserves from Al-Noor and Al-Shomou to 1.8 billion barrels by 2003 and 2.7 billion barrels by 2011.
Yibal, discovered in 1962, is Oman's largest producing oil field, supplying around one-quarter of PDO's total production. In 1986, the field's output was boosted from 120,000 bbl/d to more than 140,000 bbl/d with the installation of water injection facilities. Production was increased further following the completion of a $200-million development project, called Yibal Shusiba Phase II, in 1994. The project involved drilling 96 wells, mostly horizontal, and modifications to production stations B, C, and D, which included the installation of gas injection facilities. Yibal currently produces around 180,000 bbl/d. Oman's second largest oil field, Nimr, was discovered in 1980 and is located in the southern part of the country. Nimr currently produces about 178,000 bbl/d from more than 307 wells.
Oman's oil production rose significantly in 2000, as the country reversed modest production cuts which had been undertaken in cooperation with OPEC, and began production from newly developed fields. Production at the al-Noor field in southern Oman began in August 2000, at a rate of around 9,400 bbl/d. The Mukhaizina field, also in southern Oman, began production in mid-2000, and had reached production of nearly 25,000 bbl/d by the end of the year. Finally, the Burhaan field, in central Oman, commenced production in June 2000 at a rate of over 24,000 bbl/d.
Foreign companies recently awarded concessions for exploration include Novus Petroleum, which signed an agreement for Block 17 in September 1999. Oil India Limited (OIL) also has entered Oman's upstream sector, purchasing a 20% interest in October 1999 in an offshore block held by TotalFina Elf. Maersk Oil of Denmark received a concession for Blocks 45 and 48 in March 2001, and is to invest $18 million in exploration over a four-year period.