Oman Takes Steps to Safeguard Future Without Oil--Daily Star

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5//The Daily Star, Lebanon Thursday, July 21, 2005

http://www.dailystar.com.lb/article.asp?edition_id=10&c...



OMAN TAKES STEPS TO SAFEGUARD FUTURE WITHOUT OIL

By Daniel Epps
Special to The Daily Star

BEIRUT: This sultanate in the southeast corner of the Arabian Peninsula has a relatively healthy economy today, but may face a crisis years down the road without careful, intelligent leadership. The task before the country's ruler, Sultan Qaboos bin Said, is to overcome oil dependency and reliance on foreign workers and create a diversified economy that will outlast his country's oil reserves.



The oldest independent state in the Arab world, Oman has an economy which, like those of many of its neighbors, is heavily based on oil production. While recent high oil prices have driven state revenues well above predictions, production levels - currently at 750,000 barrels per day - have actually fallen considerably in recent years, dropping 8.9 percent between 2002 and 2003 alone.



Even before the decline, OPEC nonmember Oman's production wasn't even a tenth of the output of neighboring OPEC power Saudi Arabia. And while the oil currently accounts for more than 40 percent of Oman's $24 billion GDP, it won't last forever. If no other industries pick up the slack, Oman's economy will tailspin. Economic growth will be nonexistent unless new sources of revenue are found.



Sultan Qaboos will need to work quickly, as some estimate that the oilfields will run dry in less than 20 years.

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