Omani oil production to rise 9.8% in 2022: Fitch

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The Sultanate of Oman’s crude oil production is projected to rise 9.8 per cent to 1.1 million barrels per day (bpd) in 2022, helping further narrow the country’s current account deficit to 0.2 per cent of GDP for the year, Fitch Solutions said in a new report.

“Bright prospects for oil prices and Omani production will be the main driver of a continued widening of the surplus in the trade in goods balance in 2022,” Fitch Solutions Group (FSG), an affiliate of Fitch Ratings, stated.

The output increase comes as the OPEC+ alliance, of which the Sultanate of Oman is a signatory, begins a rollback of production quotas adopted at the start of 2020 to shore up collapsing international oil prices. Oil production averaged 957K bpd in 2021, and is projected to rise to an average of 1,055K bpd in 2022, per the latest General Budget for the year.

Natural gas production, on the other hand, is anticipated to increase 4 per cent to 39.7 billion cubic metres, buoyed by new volumes from BP Oman’s Block 61 gas fields and the Mabrouk projects in central Oman.

Commenting on the improved outlook for the Sultanate of Oman’s hydrocarbon sector, Fitch Solutions stated: “We are (..) expecting oil prices to remain elevated in 2022 with our Brent crude forecast at USD72.0 per barrel (/bbl) for the year, slightly up from USD71.0/bbl in 2021 and well above the 2020 average of USD43.21/bbl. Against this backdrop, we are forecasting oil and gas exports will grow by 10.5 per cent in 2022 to reach USD18.2bn, the highest level since 2014 before oil prices crashed.”

As a result of the growth in hydrocarbon output, coupled with the uptick in oil prices, the Sultanate of Oman’s current account deficit is projected to decline to 0.2 per cent of GDP in 2022, down from the estimated 0.8 per cent shortfall in 2021. The corresponding figure for 2020 was a steep 12.6 per cent of GDP.

With hydrocarbon exports accounting for around two-thirds of total exports, the size of Omani exports is projected to rise 7.9 per cent to $43.2 billion in 2022, according to the market research think-tank.

“Elevated oil and gas revenues and relatively subdued import demand in 2022 will boost Oman’s goods trade surplus to multi-year highs. This surplus will largely offset continued deficits in the services trade, and primary and secondary income balances and keep the overall current account close to balance,” Fitch Solutions further noted.

Imports, on the other hand, are anticipated to expand by 8.0 per cent to reach $8.6bn in 2022, boosted by “relatively robust real GDP growth” projected at 5.0 per cent in 2022, said Fitch Solutions.

The overall outlook for the country’s fiscals remains positive, it noted, adding: “We believe that the outlook for the current account means that reserves will continue to accumulate while the external debt load is likely to edge lower from current levels in the short to medium term.”