Oct 23 2012 |
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WSJ: Oman Minister Says Need to Increase Oil Production to Sustain Growth
Tuesday, Oct 23, 2012
By Leila Hatoum
DUBAI--Oman needs to increase its oil production next year as part of efforts to bolster its economic growth and generate revenues to support the government budget, according to the country's oil and gas minister Mohammed Al Rumhy.
Mr. Rumhy said Monday that he expects the country's average oil production to rise to 930,000 barrels per day next year, from an average 915,000 b/d in 2012.
"Oman needs to produce more to sustain its economic growth and to support our budget," Mr. Rumhy told the Wall Street Journal in an interview.
However, despite the need for extra revenue, Mr. Rumhy said the country wouldn't be comfortable with world oil prices rising too much.
The weakness of the U.S. currency, however, has been affecting Oman and other Gulf countries which price their oil exports in dollars. With imports denominated in euros, yen and other currencies becoming more expensive, oil needs to be priced higher to protect budget revenues.
"A weakened dollar means we have to spend more, so cost of production goes up, so the margin coming from the dollar is less and it impacts our budget which means we have to start thinking about a higher dollar-oil price," Mr. Rumhy said.
"[The] same thing goes for our neighbors I think," he added, in a reference to Saudi Arabia, the United Arab Emirates and other oil-rich Gulf countries.
For the time being, oil prices ranging between $100 to $110 per barrel are "reasonable," the minister said. He sees oil prices remaining close to $100 next year.
Oman is interested in investing in oil exploration overseas, the minister added, mainly in Mozambique and other east African countries. The investments would be made through the Oman Oil Exploration and Production Co., a state-owned subsidiary of Oman Oil Co.
Oman already has a stake in an oil-producing bloc in Kazakhstan, which produces an average of 10,000 barrels per day, and a stake in an offshore exploration concession in the Caspian Sea, the minister said.
The Sultanate is also currently engaged in discussions with Iraq's government, hoping to enter a consortium that was awarded a contract for developing one of the country's oil fields. Offshore gas discoveries in Lebanon and Cyprus are also of interest, Mr. Rumhy said.
Write to Leila Hatoum at leila.hatoum@dowjones.com
(END) Dow Jones Newswires
23-10-12 0529GMT
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