Omani oil output defies forecasts

Oil production in Oman rose more than 6 per cent in the first quarter, show new figures, defying some gloomy predictions.

Oil production in Oman rose more than 6 per cent in the first quarter, figures showed today, defying some predictions that output was in irreversible decline. The sultanate produced an average of 786,000 barrels per day (bpd) of crude oil and natural gas condensate in the three-month period, up from 741,000 bpd in the first quarter last year, according to statistics from the ministry of national economy.

The figures are already higher than forecasts for the year offered by the Omani oil minister, Mohammed al Rumhy, in December. Mr al Rumhy predicted the country would produce between 750,000 and 760,000 bpd this year, and said output would eventually exceed 805,000 bpd. The production lift was a result of using advanced technology to recover more oil from fields and the government's push to develop smaller fields, said Robin Mills, a Dubai-based petroleum economist.

"It's certainly possible for them to sustain that, and even get some increases in the next few years," Mr Mills said. The rise in production runs against the regional trend, which has seen output fall in the past eight months as a result of cuts by OPEC, of which Oman is not a member. OPEC leaders have called on prominent oil exporters like Oman, Russia and Norway to reduce production in solidarity with the group to boost the price of oil.

Mr Mills said the Omani oil industry and its foreign partners deserved credit for boosting output, even when sceptics said it was not possible. The country's production closed in on 1 million bpd in 2000, only to see it fall throughout the decade to a low of 710,000 bpd in 2007. Proponents for the "peak oil theory", which predicts a sudden collapse in world oil output, have singled out Oman in the past.

But the Omani government has made clear to Total and Royal Dutch Shell, its longtime partners, that it was willing to invest in expensive technology known to squeeze more oil from its ageing fields. The country has recently been a test site for some of the most advanced oil recovery technologies available, including liquid polymers that thicken water found in oil wells, allowing engineers to put more pressure on oil that is left in the reservoir.

The government also opened up some fields to other partners, including Occidental Petroleum and several smaller firms that focused on smaller fields that the international oil companies had passed over. [e-mail]