Oman’s economy is heavily reliant on oil revenues, which account for about 75 percent of the country’s export earnings and 40 percent of its gross domestic product (GDP). During 2006, Oman’s real GDP grew at an estimated rate of 4.2 percent, down from 5.7 percent in 2005. The slowdown in economic growth occurred largely as a result of declining oil production in Oman. To help offset these declines, the government has devoted considerable resources to new exploration and production activities, enhanced oil recovery projects, and introduced policies aimed at diversifying the country’s economy away from the oil sector. The development of natural gas reserves in Oman is a central part of this effort, and natural gas production is likely to expand considerably during the next several years.

All of Oman’s domestic energy consumption is supplied by natural gas and oil, reflecting the country’s relative abundance of oil and natural gas reserves.