Oil and Gas Downstream Industry in Oman

Oman Oil and Gas Downstream Market Analysis

The Oman Oil And Gas Downstream Market is expected to register a CAGR of greater than 4% during the forecast period.

The market was negatively impacted by COVID-19 in 2020. Presently the market now reached pre-pandemic levels.

• Over the medium term, the oil refining capacity in the country is expected to increase considerably as new projects are in the pipeline. Therefore, the increasing number of new refineries is expected to boost the Omani oil and gas downstream market during the forecast period.
• On the other hand, the growing share of fuel-efficient vehicles and increasing penetration of electric vehicles in Oman are expected to hinder the market's growth during the forecast period.
• Nevertheless, several new oil and gas fields are discovered in the Arabian Sea and the Gulf of Oman, and several prospective assets are being explored in the region. Rising investments in the exploration and development of offshore fields are expected to provide a long-term boost to natural gas and crude oil production. It is expected to provide a substantial feedstock supply for Omani refineries and petrochemical plants. During the forecast period, it is expected to be a significant opportunity for the Omani oil and gas downstream market.

Oman Oil and Gas Downstream Market Trends

Increasing Number of New Refineries to Witness Significant Growth

• Oil has been the driving force of the Omani economy since the time Oman began commercial production in 1967. The sector faced a brutal hit by the 2020 oil price crash but is recovering through government support. The Omani government announced a budget of USD 22.4 billion in the fiscal year 2022 for supporting the nation's oil and gas industry. It, in turn, culminates in the growth of the oil and gas downstream sector.
• In Oman, the capacity of refinery throughput increased to 234 thousand barrels daily (kb/d) by 2021, from 193 kb/d in 2012, and the refinery throughput increased by 21.2% during this period. As of 2020, Oman is producing 971 thousand barrels of oil per day, which is expected to grow steadily during the forecast period. An increase in oil production is expected to boost the downstream sector in the country.
• In July 2021, Ras Madrakah Petroleum Industry Co. and Yanchang Petroleum International contracted Genoil Inc. to deliver technology licensing for a 200,000-b/d refinery built on Oman's eastern coast at Duqm Special Economic Zone. As of December 2022, the Duqm Refinery is almost 96% complete and is expected to start operations during 2023.
• The 230,000 barrels/day Duqm refinery project is segmented into three units. The first unit consists of the ten main processing units of the refinery. The teams can produce diesel, aviation fuel, naphtha, liquefied petroleum gas, sulfur, and petroleum coke. The 2nd unit is focused on facilities and services. In contrast, the 3rd unit includes storage and export facilities for liquid and bulk petroleum materials at the Duqm port, crude oil storage facilities in Ras Markaz, and an 81 km long pipeline for transporting crude oil from Ras Markaz to the refinery.
• Moreover, in August 2020, Oman's Sohar Asphalt LLC was awarded the Engineering, Procurement, and Construction (EPC) contract for the bitumen refinery at Sohar Industrial Port. The value of the signed agreement is USD 408 million. The five new units being installed are a vacuum distillation unit (VDU), a crude distillation unit (CDU), a bitumen blowing unit (BBU), and a hydrocracker unit (HCU). The project is expected to get commissioned by 2023.
• Hence, the refinery throughput capacity is expected to increase significantly during the forecast period due to reduced bottlenecking and the possibility of new refineries and petrochemical plants. Owing to the above factors, an increasing number of refineries across Oman will lead to the growth of the oil and gas downstream market during the forecast period.

Increasing Investments in the Downstream Sector Driving the Market Demand

• Oman is witnessing increasing investments in its oil and gas sector. The investments made by local oil and gas companies are shaping the country's economy.
• Oman created Energy Development Oman (EDO) to represent the government's stake in PDO and raise project financing. In August 2021, EDO approached various international banks to raise USD 3 billion in debt to finance Petroleum Development Oman (PDO) and Oman's gas operations.
• Gas production in Oman increased by 29.3%, from 32.3 bcm in 2017 to 41.8 bcm in 2021. Increased natural gas production is expected to provide a cheap natural gas supply as a feedstock for manufacturing petrochemicals. It is expected to boost the petrochemical sector during the forecast period.
• In November 2021, Duqm Refinery and Petrochemical Industries Company (DRPIC) announced that its Duqm refinery in southern Oman is anticipated to begin its operations in the first quarter of 2023. The project is a joint venture between the Oman government and Kuwait Petroleum International (KPI). The project includes an investment cost of USD 8 billion and a processing capacity of 230,000 barrels per day (bpd).
• Similarly, in December 2022, Omani energy company OQ signed a joint development agreement with Saudi Basic Industries Corporation (SABIC) and Kuwait Petroleum International (KPI) to build a petrochemical complex in Duqm.
• Therefore, based on the above-mentioned factors, increasing investments in the downstream sector are expected to drive Oman's oil and gas market during the forecast period.

Oman Oil and Gas Downstream Industry Overview

The Oman oil and gas downstream market is moderately consolidated. Some of the major players in the market (in no particular order) include Shell PLC, Petroleum Development Oman LLC, OQ8, TotalEnergies SE, and Oman Oil Marketing Company SAOG.

Oman Oil and Gas Downstream Market Leaders

Oman Oil and Gas Downstream Market News

• March 2023: Oman's Duqm Refinery project, one of the largest refining and petrochemical project, is expected to reach total production by the end of 2023. The refinery project covers about 900 hectares, is located at the heart of the Special Economic Zone of Duqm (SEZD), and is a 50-50 joint venture between state-owned Oman's OQ Group and Kuwait Petroleum International (KPI). Once operational, the Duqm refinery project will improve the country's refining capacity by refining 230,000 barrels of crude oil products daily, serving demand growth in the region and globally.
• May 2022: The Salalah Free Zone signed two agreements with a net investment of USD 89 million to establish a plant for producing petrochemical products and a workshop for maintaining and repairing containers.