Oman Budget Reforms May Ease Pressure On Gas-Fired Power Plans

Low oil prices and high domestic energy subsidies have led Oman to predict a budget deficit this year. But, Muscat’s resulting plans for economic reforms could make OPWP’s powergen plans more secure.

Oman aims to reduce spending by 11% this year; new fuel prices will be announced later this month with a view to slashing subsidies by a massive 56% (see p17). With the UAE raising transport fuel prices last August and Saudi Arabia last week raising prices for fuel and electricity (see p18), cash-strapped Oman is the next Gulf state to try to loosen the burden of subsidies in a period of low oil prices.

Oman last year raised gas prices for industry to $2.5-3.0/mn BTU. While this is at least double the new gas price announced by Saudi Arabia, Oman’s domestic gas industry does not have anywhere like the potential for expansion of Saudi Arabia’s, and is already overstretched. Power generation plans coordinated by state utility OPWP add to the burden, taking powergen gas demand from 7.1bcm in 2014 to 9.5 bcm in 2021. (CONTINUED - 536 WORDS)

DATA INSIDE THIS ARTICLE

table Oman Power Projects
chart Oman Peak Electricity Demand Projection (Gw)