According to news reports reaching here, the Minister Responsible for Financial Affairs, Darwish bin Ismail Al Balushi, yesterday said that the government is looking at reconsidering local fuel sale, in view of the fact that government support has reached OMR1 billion in the 2012 annual budget.
The minister was quoted as saying that current prices have been determined since the 1980s, when global oil prices did not cross $25 per barrel. He also indicated that since then no changes have been made on local fuel prices, except for prices of diesel in 2006. Since the 1980s, global oil prices have jumped at least four-times.
Oman sells petrol super grade for 120 baisas per litre, 114 baisas a litre for regular and 146 per litre for diesel in the capital area. However, it slightly varies beyond 100 kilometres from capital area.
Al Balushi added that the diesel smuggling issue has become a real concern for the Omani government, especially due to financial burden, time, and effort to watch and detain violators, which causes an additional burden on institutions concerned.
It was earlier reported that a panel is looking into revamping subsidy in such a way to get the benefits to the deserving income group, like other countries in the world. This follows a recommendation from the Majlis Al Shura.
The comprehensive study will suggest implications of the present subsidy system and alternatives for directly channelising it to the deserving groups. The present subsidy benefits are enjoyed by all sections of the society and the idea is to confine it to eligible groups. The total subsidies on all these are expected to touch an alarming level of OMR1.3 billion this year. This fund can be used by the government for other purposes, including youth training or investment projects that could generate new employment.
International Monetary Fund (IMF) has been calling on Oman, along with other GCC countries, to reduce subsidy in a move to prudently manage state resources. Countries in the Middle East and North Africa (Mena) region are spending $200 billion on general subsidies and there is a need to curb this spending.
According to IMF, these subsidies are not an efficient way of helping the poor, because the bulk of the spending is going to people who consume more energy, who are generally better off.

© Times of Oman 2013

The Kingdom intends to remain a world energy powerhouse for the foreseeable future, partly by exploiting new technology which has unlocked vast quantities of oil and natural gas in North America.

Developing unconventional and renewable energy will allow Saudi Arabia to meet rising domestic demand for energy while maintaining crude-oil exports, Al-Naimi said, adding that the Kingdom “will not stint” in ensuring that its customers’ oil needs are met.

“We have rough estimates of 600 trillion cubic feet of unconventional shale gas. The potential is very huge and we plan to exploit it,” he said.

He didn’t say though how quickly Saudi Arabia might begin commercial production of shale gas or shale oil, or describe how it will supply the large amounts of water used in hydraulic fracturing, or “fracking,” the process used to extract oil and gas from shale.

In separate comments to The Wall Street Journal, Al-Naimi said he anticipated that the Kingdom’s shale-oil reserves could also be exploited, but added that “we have to find them.”

Saudi Arabia’s lead over the US in crude oil production narrowed sharply in the past year, thanks to rising shale-oil output in the US, where crude production in November and December topped 7 million barrels a day for the first time in 20 years. Saudi output eased to 9.2 million barrels a day in December, from 9.6 million the previous month.

The US Energy Information Administration recently forecast that US crude output will swell to 7.5 million barrels a day within six months. The International Energy Agency, which represents key oil consumers, has predicted the US will overtake Saudi Arabia as the world’s largest oil producer by 2020.

Natural gas output from state giant Saudi Arabian Oil Co. averaged 9.9 billion cubic feet per day in 2011, up from 9.4 billion cubic feet per day in 2010.

Aramco Chief Executive Khalid Al-Falih said in December that the company plans to drill seven natural gas exploration wells in deep and shallow water in the Red Sea, off the coast of the northwestern city of Tabuk.

Al-Naimi said that prospects for global production of shale gas and oil – including in China, Ukraine, Poland and Saudi Arabia – were so promising that the Kingdom might not need to continue with its decades-long policy of maintaining an oil-output cushion for use in global supply disruptions. “It is not a question whether Saudi Arabia has spare (oil) capacity. It is a question of whether we need to spend billions maintaining it at all,” Al-Naimi said. “New commercial reserves such as shale oil are good news for the global economy” and “will ensure even greater stability of markets and prices,” he said.