Where to invest in Oman

Oman is entering a dynamic phase of economic transformation driven by ambitious national strategies, political reforms, and global partnerships. For companies and investors seeking growth in the Gulf region, the Sultanate offers attractive investment prospects.

Industries for Investment

Oil and Gas

Oil has been the driving force of Oman's economy since commercial production began in 1967. The oil industry supports the country's modern and extensive infrastructure, including electricity, roads, public education, and healthcare.

Oman is capable of producing up to one million barrels of crude oil and condensate per day but adheres to OPEC+ quotas. Oman's oil reserves consist primarily of heavy oil, and China is the main export market. The Omani government derives approximately 70% of its annual budget from oil and gas revenues through taxation and joint ownership of some of the most productive fields, and the industry accounts for approximately 30% of the country's gross domestic product. In June 2022, the Ministry of Energy and Mineral Resources (MEM) announced that Oman had crude oil reserves of 5.2 billion barrels and gas reserves of approximately 24 trillion cubic feet. The MEM also announced new oil discoveries that will increase Oman's production by 50,000 to 100,000 barrels over the next few years.

The Ministry of Energy and Mineral Resources (MEM) coordinates the government's role in Oman's hydrocarbon sector. State-owned Petroleum Development Oman (PDO) owns the majority of Oman's oil reserves and is the country's largest oil and gas operator. In 2019, Oman established the state-owned energy company OQ, consolidating several state-owned enterprises involved in oil and gas exploration, transportation, and refining. The OQ Group holds interests in four producing blocks, one inactive block, and five exploration blocks, both onshore and offshore Oman. Energy Development Oman (EDO), a state-owned holding company, represents the government's stake in PDO and raises financing for the projects.

PDO continues to focus on improving cost efficiency in its operations while strengthening its In Country Value (ICV) strategy to create jobs and training opportunities for Omanis and support Omani small and medium enterprises. The company is also actively investing in alternative energy sources, using solar power to generate steam for enhanced oil recovery, which helps maintain oil production in mature and geologically complex fields.

Oman also has natural gas reserves that could play a leading role in stimulating industrial growth in the coming years. BP produces over 1.5 billion cubic feet of gas per day from the Khazzan field.

Oman is rapidly developing value-added production and processing through refining and petrochemical projects, such as the completed Sohar refinery modernization project and the construction of the $7 billion OQ8 refinery in Duqm (a joint venture with Kuwait), which is the largest industrial investment project in the country. Planning for the $10 billion Duqm petrochemical complex project continues.

Leading Subsectors

The leading subsectors of Oman's oil and gas sector include: drilling and drilling services, hydraulic fracturing (fracking) technologies and services, refining equipment, oil production equipment, crude oil sand removal equipment, boilers, drill rods, separators, tank burners, heavy oil pipeline heating, water treatment systems, quality control, steam injection, and other enhanced oil recovery technologies. Other promising subsectors include gas processing plants, pipelines, wellsites, wells, compressors, drilling rigs, hydraulic fracturing equipment, operational support, and infrastructure.

Opportunities

The oil and gas sector continues to be one of the best markets for goods and services. Much of the country's oil infrastructure is aging, creating a market for pipelines, wellhead equipment, pumps, and related products. Furthermore, Oman has several mature fields and fields with complex geology, and the first significant offshore exploration work began in 2017. As a result, Oman requires advanced technologies, such as 3D seismic analysis, to facilitate exploration. Some in Oman's oil and gas sector are interested in computer systems that can track remote wells and reduce labor costs.

Analysts expect investments to shift toward maximizing production from cost-effective fields using innovative technologies to reduce costs and eliminate losses. PDO has committed to ending scheduled gas flaring by 2030 in line with the World Bank's Zero Scheduled Gas Flaring initiative. The Omani government is investing in liquid hydrocarbon storage and hydrocarbon logistics projects in the country. Oman is not yet a major producer of petroleum products, but plans to expand its refining and storage sector.

In Oman, significant technical developments in oil exploration and production are underway onshore. Industry experts estimate significant potential for new operations in the country's offshore blocks, the first major exploration of which began in 2017. Omani authorities have expressed particular interest in proven hydraulic fracturing technologies, which offers opportunities for foreign companies and their suppliers. Oman will continue to transition to more innovative and unconventional oil production methods to reduce costs and improve efficiency. Many multinational companies operating in Oman are leveraging their experience gained in global markets, particularly in shale oil production.

Oman's National Energy Strategy aims to generate 30% of its electricity from renewable sources by 2030. Renewable energy offers new opportunities as Oman seeks to diversify its economy and explore alternatives to hydrocarbons for power generation. Alternative energy sources could allow Oman to offset its significant domestic consumption of fossil fuels used in power generation and desalination, which is the source of much of Oman's drinking water. Replacing fossil fuels with alternative energy sources in these areas could help Oman generate additional revenue through increased oil exports.

Transportation and Logistics

Oman's Logistics Development Strategy sets long-term goals to increase the logistics sector's contribution to GDP. Oman's strategic goals over the past several years have focused on reducing congestion and increasing capacity through investment in infrastructure and technology for new ports and roads, as well as expanding routes for national air carriers. Oman aims to leverage the potential of its deep-water ports on the Gulf of Oman and the Indian Ocean to become one of the world's top ten logistics hubs by 2040.

All seven commercial ports in Oman are state-owned. Three of them are deep-water: Sohar in the north, Duqm in the central coastline, and Salalah in the south. All three deep-water ports operate under concessions through joint ventures between the government and foreign private companies and are connected to 86 ports in 40 countries. The strategically important port city of Duqm, located midway between Muscat and Salalah on the Indian Ocean coast, is Oman's flagship development project. Duqm boasts a new port, a naval base, a dry dock, a fishing center, an industrial free zone, hotels, power and desalination plants, an oil storage facility, and a nearly completed refinery.

The government also plans to build a railway line to facilitate the transport of mineral resources from the Shweimiya district in Dhofar province to the port. Oman Rail, in a joint venture with Etihad Rail, a government-owned company in Abu Dhabi, is overseeing the construction of the $3 billion railway line, designed to provide passenger and freight transportation between Abu Dhabi and Sohar, Oman.

Road construction is another important area of ​​domestic and regional development. According to MTCIT, the length of existing and new road projects exceeds 1,300 km. These projects include the Dibba-Lima-Khasab road, the completion of the Batinah (Barqa-Suwaiq) coastal road, the Harwib-Al-Mazyuna-Metin road, the completion of the Sharqiyah Expressway project, the expansion of the Khaima-Thumrait road, the Raisut-Mughsayl road, and the Jaalan Bani Bu Ali-Jalan Bani Bu Hasan road. In December 2021, the government opened a new road across the Empty Quarter, connecting Riyadh with Muscat and other major Omani cities, including Duqm and other Omani ports.

Oman continues to expand its bus network and private taxi system. In December 2021, Oman opened a dry port in Khazaen Economic City, a logistics hub outside Muscat that includes a free zone, an automotive market, and factories. In November 2022, Maersk added Khazaen Dry Port to its network of "ports of call," offering transportation services, a container terminal, and refrigerated container services for import and export of goods. The government is also considering privatizing the national bus and ferry network.

State-owned airline Oman Air signed a memorandum of understanding with state-owned low-cost carrier Salam Air to leverage network synergies. In 2021, Oman entered into a codeshare agreement with Qatar Airways to expand its routes.

Oman's modern Muscat International Airport opened in March 2018, and the passenger terminal at Duqm Airport opened in September 2018, with plans to add regional and international routes. Salalah and Sur Airports in Oman also serve international destinations.

The government expects the private sector to play a greater role in the future, not only in providing capital but also in collaborating with the public sector to manage state assets.

Leading Subsectors

Oman imports automobiles for the domestic market and for re-export to regional markets. In addition to its continuing passenger car market, Oman imports construction, airport, and port equipment, including buses, aircraft, X-ray equipment, cranes, rubber-tyred gantry cranes, access control and port security systems, logistics software, engineering services, project management services, cold storage supply chain services, and consulting services.

Oman plans to resume its railway project to connect with the planned Gulf Rail Link and is evaluating the feasibility of a rail link between Sohar and Khazaeen.

Opportunities

Oman's strategic location on the Strait of Hormuz, as well as deep-water ports on the Gulf of Oman and the Indian Ocean beyond the Strait, are key advantages as logistics infrastructure develops and transport accessibility improves. The government has resumed open tenders for infrastructure projects after a hiatus from 2020 to 2022 due to budget constraints.

The Duqm Special Economic Zone Authority and the Port of Duqm are actively attracting foreign investment to fund development. In addition to large-scale construction projects, Duqm requires infrastructure development in the areas of wastewater treatment, water disposal, desalination, power plants, buildings, telecommunications services, and public amenities. In July 2021, Asyad built its first new vessel in the Duqm dry dock, which also provides ship repair and maintenance services. Saudi Arabia is considering establishing an industrial zone in Duqm. The Duqm oil refinery project offers opportunities for transportation and logistics.

Oman's two operating ports in Sohar and Salalah also present significant opportunities. The Sohar Free Zone is at the forefront of Oman's growing oil refining industry. The industrial zone aims to attract additional manufacturing capacity and distribution centers. Sohar is also home to Oman's largest operating oil refinery.

Salalah is strategically located at the intersection of east-west shipping routes. Its port boasts a container terminal with seven berths with depths of up to 18 meters and a general cargo terminal with 12 berths with depths of up to 16 meters, with infrastructure to handle the world's largest container ships, as well as bulk cargo, bunkering, and warehousing.

Oman is increasingly attracting private sector investment and expertise, particularly for the development of its projects through joint ventures and public-private partnerships (PPPs). The government will also rely on PPPs to operate four terminals for container, general, bulk, and liquid cargo at the Port of Duqm, as well as to develop the ports of Khasab and Shinas in the north of the country. The government aims to transform the Sultan Qaboos port into a multifunctional coastal cruise and entertainment hub using a public-private partnership (PPP) model.

In the logistics sector, opportunities are opening up for the development of cold chains, warehousing, value-added services, cargo terminals, and e-commerce logistics hubs.

Renewable Energy

Oman has committed to achieving net-zero emissions by 2050. The government aims to expand its power generation capacity through independent renewable power projects (IPPs), aiming to generate at least 30% of its electricity from renewable sources by 2030, primarily through onshore wind and solar power plants.

State-owned PDO, which aims to reduce its emissions to 50% of 2019 levels by 2030, is an early pioneer in large-scale solar power projects in Oman. Oman's integrated oil and gas company, OQ, is also seeking international partners to replace 40% of its three-gigawatt electricity consumption with renewable energy projects.

In January 2022, Oman's largest independent solar photovoltaic (IPV) project, Ibri 2, began commercial operation. Oman Power and Water Procurement Company (OPWP) awarded the project to a consortium of Saudi and Kuwaiti firms, with the Beijing-based Asian Infrastructure Investment Bank (AIIB) providing a $60 million loan. This project is AIIB's first renewable energy financing project in Oman and the region. In September 2023, construction began on another solar project, led by French developer EDF Renewables and its consortium partner, Korea Western Power (KOWEPO), Ibri 2. A 500-megawatt solar photovoltaic power plant.

Oman has begun implementing several other projects in line with its 2030 targets, including a wind farm in Dhofar, an independent solar power plant in Manah, 11 solar-diesel hybrid power plants, and the Sahim (Contribution) initiative to install small-scale solar panels on residential and commercial buildings.

The Ministry of Transport, Communications, and Information Technology (MTCIT) announced in its plan that Oman will phase out internal combustion engine vehicles and ensure that 79% of the country's vehicles are electric by 2035. The ministry estimates that there will be at least 22,000 new electric vehicles in Oman by 2040. Since July 2023, Oman has implemented customs and tax incentives and mechanisms to encourage the purchase of electric vehicles and achieve net-zero neutrality in the transport sector.

Clean energy development in Oman is not limited to traditional renewable sources. In October 2022, the Ministry of Energy and Environment unveiled a Green Hydrogen Development Strategy and announced the establishment of Hydrogen Oman (Hydrom), a subsidiary of state-owned Energy Development Oman, to oversee the development of this sector. Oman plans to invest $140 billion in the green hydrogen industry and hopes to achieve production of 1 million tons per year by 2030. Oman also created a new government body, the Oman Sustainability Center, to oversee plans to achieve carbon neutrality.

In November 2022, Hydrom initiated a bidding process for hydrogen project concessions, in which investors offered projects in exchange for land for their development. In June 2023, Hydrom awarded contracts for five large-scale green hydrogen projects to companies including BP (UK), DEME (Belgium), and a consortium including Shell (UK/Netherlands). The total investment amounted to over $30 billion, and the total production volume was 750 kilotonnes per annum (KTPA) across 18 gigawatts of renewable energy capacity at these sites.

Leading Subsectors

Green hydrogen, independent solar power producers (ISPs), wind, and solar power are the leading subsectors in Oman's renewable energy sector and have created opportunities for foreign companies in equipment and services sales, technology transfer, research and development, and the privatization of state-owned assets.

Opportunities

Omani state-owned enterprises are preparing to issue tenders, opening up opportunities for existing clean energy technology providers and financiers of large infrastructure projects.

Hydrom has launched the next round of public auctions for green hydrogen units in Oman. Companies can submit investment proposals for the development of large-scale green hydrogen production projects. hydrogen on three plots of land in the Dhofar region.

According to Nama Power & Water's seven-year forecast (2023-2029), four new wind-based independent power projects (IPPs), one medium-sized solar photovoltaic IPP, and a waste-to-energy project will be available for procurement through competitive tenders with requests for proposals.

OQ Alternative Energy, the green energy investment arm of OQ Group, also plans to develop a pipeline of renewable energy projects totaling approximately two gigawatts.

Information and Communications Technology (ICT)

Oman's long-term development plan, Vision 2040, includes building national technical capacity, constructing vital ICT infrastructure, and improving e-government services. The government prioritizes ICT development, and the sector has strong growth prospects in the coming years.

The Ministry of Transport, Communications, and Information Technology (MTCIT) oversees national IT infrastructure projects and e-government initiatives. The Telecommunications Regulatory Authority exercises significant oversight and provides policy support, particularly for the rollout of 5G networks in Oman. The Oman Technology Fund has invested in local companies that have developed online auctions, marketplaces, and educational platforms.

Omantel and Ooredoo are the two main telecom operators in Oman. A third operator, Vodafone, entered the market in 2022. Oman's price-sensitive market has increased the appeal of low-cost options from unreliable providers, but telecom operators have shown interest in diversifying their commercial partnerships in the 5G space.

Oman is developing ICT infrastructure to reduce the digital divide as part of its National Broadband Strategy, which aims to provide high-speed broadband access to 95% of the population.

Leading Subsectors

E-government services, smart city initiatives, cybersecurity solutions, drones and counter-drone systems, data management/data centers, disaster recovery services, broadband infrastructure expansion, e-commerce, blockchain/AI/IoT solutions, fintech, space technologies, and training and development staff.

Opportunities

Workforce Training and Development: Oman has expressed aspirations to establish a center of excellence, focusing on mentoring and supporting small and medium-sized enterprises, and is seeking to form partnerships with global technology organizations.

E-Government Services: MTCIT manages the government network and cloud services and is leading efforts to expand e-government services. In 2022, MTCIT launched a digital transformation program with an estimated investment of $442 million to improve government e-services and digital infrastructure.

Data Centers: In line with the Digital Oman Strategy, businesses are increasingly migrating to cloud computing, creating commercial opportunities for data center development. Oman Data Park is an example of a joint venture between state-owned telecoms company Omantel and another private company. The growth of e-commerce is increasing demand for cloud services and data centers, and is spurring collaboration between the government and the private sector in these areas. MTCIT signed a memorandum of understanding with Amazon Web Services to launch joint cloud data centers.

Disaster Management Services: Oman is seeking an investment of approximately 25 million riyals from the government and private sector to establish a full-fledged disaster management services center. The Omani government has identified this sector as a target for development.

Cybersecurity: Oman aims to build a cybersecurity industry, focusing on managed security services, cybercrime analysis, security incident management, and consulting. Oman's first cybersecurity center is part of the Oman National Computer Emergency Response Team, which protects government agencies from cyber threats.

Blockchain/AI/Internet of Things: The SaS Entrepreneurship Center at MTCIT oversees the Smart Cities project, which aims to launch initiatives in the Internet of Things (IoT), artificial intelligence, and blockchain. Omantel provides government clients with Smart Cities project implementation services and ICT solutions, including blockchain technology and intelligent cloud call centers. Sultan Qaboos University has opened an IoT lab and a communications and information research center to implement projects such as smart streets and a remote healthcare system for monitoring and diagnostics. Oman has announced its intention to designate an AI zone in Duqm for research and experimentation.

Cryptocurrency:The Central Bank of Oman is developing its own digital currency and open banking services. In January 2022, Oman's financial regulator, the Capital Markets Authority, invited companies to participate in a tender to establish a regulatory framework for virtual assets, and in July 2023, the Capital Markets Authority requested public comments on the proposed regulatory framework governing digital assets. Oman has also expressed interest in establishing facilities to host cryptocurrency mining hubs. In August 2023, Oman partnered with Abu Dhabi-based Phoenix Group to establish a 150-megawatt cryptocurrency mining farm, and by October 2023, the country opened a $370 million facility managed by Exahertz International, which began mining cryptocurrency.

Fintech: Digital payment solutions are rapidly evolving, fueling the growth of the fintech sector in Oman. In 2020, the Central Bank launched its Fintech Regulatory Sandbox Framework as a closed testing environment for fintech companies to prove their viability. In September 2023, the Central Bank of Oman (CBO) issued guidelines for banks and payment service providers to offer card tokenization services, allowing customers to register payment cards and apps, such as Apple Pay and Samsung Pay, in Oman.

Space Technologies: Oman's space ambitions began in January 2023, when Virgin Orbit's attempt to launch Oman's first satellite into orbit failed. Following this, Oman announced the construction of a spaceport in Duqm. The Government of Oman has established Space Communications Technology (MTCIT) as a wholly state-owned enterprise with a mandate to develop and implement Oman's first satellite communications project.

MTCIT's long-term national space policy outlines 14 projects and investment opportunities: a space cloud computing partnership, a satellite ground control station, a direct receive station, a national space data platform, an end-user application development program, a space applications center of excellence, a CubeSat project, a space accelerator, a national space observatory, a world space conference, a satellite research and development program, a national satellite communications initiative, a regional satellite correction system, and a launch pad partnership.

Mining and minerals

Mining is one of the Omani government's priority sectors as part of its economic diversification program. Oman's mining industry is attracting increasing attention from both foreign and local operators, as Oman was the first producer and exporter of ferrochrome in the Gulf. MEM and Minerals Development Oman (MDO), a government-backed minerals company, are responsible for developing and attracting investment in this sector. MEM's Energy and Minerals Development Division focuses on developing mineral processing and increasing domestic value addition, rather than exporting raw materials.

The Minerals Law 2019 contains provisions regarding exploration and expropriation activities, as well as the types of permits and available concession agreements. The law provides for a minimum mining license term of five years and flexible royalty payment terms.

Despite numerous quarrying and mining activities, Oman's mineral resources, including metals and industrial minerals, remain relatively unexplored. Oman's mountains contain pristine and exposed ophiolites that may contain deposits of metals such as chromite, cobalt, copper, gold, lead, magnesium, manganese, nickel, palladium, platinum, silver, vanadium, and zinc. Some promising minerals in Oman are listed below:

Gypsum:According to local media, Oman is the world's largest exporter of gypsum by weight, primarily to ASEAN countries and South/East Africa.

Chromite: According to the Oman Chromite Company, Oman has approximately 30 million metric tons of chromite ore. Oman exports metallurgical-grade chromite ore in response to growing demand from China and a global ferrochrome shortage.

Copper: Oman has identified large-scale copper mining as a strategic project, and several foreign mining companies are active in Oman. A joint venture with an Australian mining company plans to build a copper processing plant with a capacity of one million metric tons per year.

Other Materials: Surveys have shown the presence of deposits of asbestos, coal, iron ore, lead, manganese, nickel, silver, and zinc.

Leading Subsectors

Primary Metallic Minerals: Copper, chromite, laterite, manganese.

Industrial Minerals and Rocks:Limestone, marble, dolomite, gypsum, quartz sand and quartzite, clays and shales, salt, coal, olivine, kaolin, salt, aggregates.

Opportunities

In March 2023, Oman invited companies to participate in A tender was issued for seven new mining concessions across the country, with potential for the production of gypsum, dolomite, limestone, phosphates, clay, copper, gold, silver, and chrome. That same month, the Ministry of Energy and Mineral Resources announced the signing of its first agreement with a foreign investor, the British company Knights Bay, for the mining of nickel and its derivatives.

Oman has long planned to develop a domestic rail network to transport minerals from the country's southern interior to the port of Duqm for processing and refining.

Tourism and Hospitality

Tourism is another driver of growth in Oman. The government actively encourages private sector participation in hospitality, resorts, ecotourism, and cultural heritage conservation. This sector has demonstrated steady growth thanks to national initiatives to promote sustainable and cultural tourism.