The architecture of Oman’s energy power: Resources, ports and global partnerships

At Duqm, Kuwait holds a stake in refining and product-export capacity outside the Strait of Hormuz, while European partners envisage a departure point for future hydrogen shipments. Oman is using this coastline to attract industrial investment and connect its energy resources to overseas markets. The challenge for Muscat is to turn those connections into lasting domestic value.

Oman has fewer financial resources than Saudi Arabia and the UAE, while its gas exports cannot match Qatar’s scale. Its strategy depends on combining domestic resources, ports and diverse partnerships into a distinctive position in the energy market. Difficult choices arise when export projects and the domestic economy compete for gas, electricity, water and capital.

Oil and Duqm: Connecting revenue with geography

Oil remains a major pillar of Oman’s economy. According to the US International Trade Administration, crude oil and condensate reserves stood at approximately 4.8 billion barrels at the end of 2024. Sustaining revenue requires investment in production and activities that retain more value domestically.

The Duqm refinery, with a capacity of 230,000 barrels per day, is an equal partnership between Oman’s OQ and Kuwait Petroleum International. Kuwait gains refining and product-loading capacity outside Hormuz, with access to Asian, African and European markets. Oman connects its partner’s capital and industrial experience to Duqm’s development.

Crude shipped from Kuwaiti ports to Duqm must still pass through Hormuz. The investment’s geographical advantage lies in locating refining and subsequent product exports on a different coastline, alongside the ability to purchase feedstock internationally.

The Ras Markaz storage facilities and their pipeline connection to the refinery support this flexibility. Buyers value alternative routes, but higher insurance costs and shipping companies’ decisions during a crisis can disrupt Duqm’s trade even without damage to its facilities.

Refining and petrochemicals generate industrial revenue, although margins and global demand remain volatile. Diversifying hydrocarbon products addresses only part of Oman’s wider economic diversification challenge.

Gas: Export commitments and domestic demand

Every new gas export commitment also represents a decision about domestic consumption. Power plants, industry and oil production operations draw on the country’s gas resources. Oman LNG’s facilities at Qalhat, near Sur, operate three liquefaction trains, connecting domestic production to international markets. Long-term contracts provide predictable revenue while allocating part of future supply to overseas customers.

Upstream requirements vary by field. Petroleum Development Oman’s 2024 Sustainability Report records an increase in gas injection at Harweel 2AB from three to four million cubic metres per day. Other projects use steam or polymers. Assessing the opportunity cost of gas used in oil production therefore requires attention to gas composition, recycling and reservoir requirements.

The 2024 final investment decision for Marsa LNG, involving TotalEnergies and OQ, opened another avenue through marine fuel supply. For policymakers, the allocation question remains: how does export revenue compare with the value of gas in electricity generation, industrial employment and sustained oil production? That calculation should guide capacity expansion.

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Solar and wind: Widening allocation choices

Renewables can release some gas consumed in power generation for other uses. Ibri II solar, with 500 MW of capacity, and the 50 MW Dhofar I wind farm are operational. Manah I and Manah II add a combined 1,000 MW of solar capacity and appear on Nama’s list of operational projects.

With no nuclear generation in its current electricity mix, Oman’s diversification plans centre on expanding solar and wind capacity alongside its gas-fired plants. Using this capacity effectively requires grid development and management of variable output. Rising demand may absorb some of the resulting gas savings.

The Miraah project demonstrates another application: solar-generated steam for thermal oil recovery, reducing the gas consumed in that process. This brings improvements in efficiency and operational emissions into an established industry, although emissions from the eventual consumption of its oil remain.

Hydrogen: Overseas markets and domestic value

The 15 April 2025 agreement to develop a liquid hydrogen corridor links Duqm with Amsterdam and German industrial centres, including Duisburg. Partners intend to coordinate production, liquefaction, transport and distribution. Commercial exports depend on completing that chain.

Industrial buyers will assess delivered prices and supply reliability. Electricity, water, liquefaction and shipping must be provided at costs that make Omani hydrogen competitive. Desalination infrastructure and brine management also belong in the financial and environmental assessment.

Muscat must decide how much of the wider value chain to develop domestically. Using hydrogen in industries such as low-carbon steel could support additional employment and value creation. Technology transfer and workforce development require an industrial policy pursued alongside export agreements.

Global partnerships: Influence and its limits

Oman’s balanced relations with Iran and the Arab Gulf states create room for cooperation with multiple partners. Investors will nevertheless compare Duqm with competing industrial centres. Costs, regulation and infrastructure quality will determine how far Muscat’s diplomatic standing translates into investment.

Foreign partners have an interest in keeping these facilities operating. During a regional crisis, however, shipping and insurance decisions may interrupt trade regardless of that shared interest. Oman’s approach therefore needs both diverse partnerships and practical arrangements for maintaining supply. Its energy power will ultimately depend on how these sectors connect. Gas, electricity and ports that support domestic industry and skills would give the country more options as markets change. Expanding exports becomes a lasting achievement when Oman also gains greater productive capacity, employment and reliable energy supply.

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