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Oman may have huge hydrocarbons wealth, but accessing oil and gas supplies has long proved a challenge. More positively, the difficulties associated with exploiting oil and gas reserves – which are dispersed in complex clusters – have made the nation a global leader in advanced hydrocarbons recovery techniques. For international oil companies with the capacity for enhanced oil recovery techniques, Oman therefore remains an attractive destination for investment. This comes as the Ministry of Oil and Gas is redoubling its efforts to maintain and expand crude oil production to meet domestic demand: the expansion of the refining facility at Sohar and the development of a new refinery operation are together set to more than double the output of refined products and open the door to a new export business. This is part of a 10-year plan that outlines spending of $60bn-70bn between 2013 and 2022 on oil exploration and production, and around $40bn on its efforts to exploit gas resources. At the same time, the Sultanate has made an effort to diversify its energy base in recent years, with several new programmes for solar and wind technology in the pipeline. This chapter includes interviews with Harib Al Kitani, CEO, Oman Liquefied Natural Gas (Oman LNG), and Nasser bin Khamis Al Jashmi, Undersecretary for the Ministry of Oil and Gas.

With participants showing strong growth in a highly competitive market, the sultanate’s insurance sector is experiencing a period of both vertical and horizontal expansion. Stronger regulatory requirements on solvency and governance are also on the way, while a major new element, Islamic insurance – takaful – is also being added to the mix. While the market penetration rate remains low compared to more established markets elsewhere in the region and the world, the sector has seen consistent growth in recent years, with gross premiums up 12.2% between 2010 and 2011. Indeed, the sector is now entering a period of change and future consolidation is expected, with plenty of opportunities for international investors to become involved. Rising per capita income, GDP growth on the back of high energy prices and a changing social profile are all contributing to new approaches and attitudes towards insurance, which are likely to bring about significant sector growth in the years ahead.

While international investor confidence has been affected by the global financial crisis, the sultanate has remained relatively stable, with sustained high oil prices resulting in increasing government spending and higher disposable incomes. Moreover, these are exciting times for Oman’s capital markets, as a number of recent initiatives aimed at broadening activity are coming into play. The introduction of Islamic finance, for example, is set to raise activity in the capital markets, with regulations regarding Islamic bonds and insurance now being considered. Regulators have also moved to install the latest technical and regulatory systems alongside the most up-to-date practices in corporate governance. Going forward, much will depend on the international and regional scenario, of course, but Oman possesses the sound economic fundamentals necessary to withstand any overseas headwinds. This chapter includes an interview with Sheikh Abdullah bin Al Salmi, Executive President of the Capital Market Authority (CMA).

Backed up by strong macroeconomic fundamentals and the sultanate’s reputation for stability and sound financial management, Oman’s banking sector has been remarkably resilient in recent years. The sector has registered good growth in the face of market volatility linked to the Arab Spring and the eurozone crisis. Going forward, banks are now entering a period of substantial change. In 2013, Islamic banks will enter the field for the first time, bringing heightened competition for deposits and loans, while also bringing wider choice for Omani individuals and businesses. Indeed, with competition set to increase, conventional banks are now focusing on expanding into Islamic banking, opening dedicated branches for sharia-compliant financial services. This is set to bring a wider range of products and services within the sector. This chapter includes an interview with Hamood bin Sangour bin Hashim Al Zadjali, Executive President of the Central Bank of Oman (CBO).

While hydrocarbons accounted for 38.8% of the sultanate’s GDP in 2011, non-oil activities have grown by 55% from 2007 to 2011, from OR9.2bn ($24bn) to OR14.3bn ($37.7bn). Of these, the services sector has consistently been the largest category recently, hovering between a 30% and 40% share of overall GDP, with industry making up some 15-20%. However, despite the growth of non-oil activity, 2012 saw the petroleum sector’s contribution to national income grow by 25.7%, as a result of higher oil prices and stronger export volumes. This combination of healthy oil revenues and boosted non-oil sector performance has helped to offset rising expenditures and support the private sector, with particular emphasis on job creation. In the years leading up to 2015, the government aims to create between 200,000 and 275,000 new jobs. This chapter includes an interview with Ali bin Masoud Al Sunaidi, Minister of Commerce & Industry.