Omani government revenues for 2016 are on track to fall to their lowest level since 2009 as stubbornly low oil prices weigh down on the economy. Despite this, the Sultanate has maintained upstream spending as it drives towards record oil and gas output.

State upstream spending in the first half of the year was 99.6% of the same period last year, when annual expenditure was only marginally down on 2014’s record OR5.19bn ($13.5bn at a fixed OR1=$2.597). In fact, state capital expenditure (capex) in the first half of the year is up 13% year-on-year against 2015 at $1.53bn, though operating expenditure has fallen 23% to $738mn as the government has squeezed contractors, and taken advantage of falling raw materials prices (see chart 1). (CONTINUED - 1956 WORDS)