Oman unveils a record budget for 2011: RO 8.13bn

With Royal Decree No 2/2011 ratifying the 2011 State General Budget, there are a few things to take from this...

Last year, 2010, the Budget was RO 7.434bn. This was based upon an average oil price of $58 a barrel. The actual oil price was around $70 a barrel for 2010, so Oman will have netted a surplus from all it's petrochemical revenues. Additionally, Oman's daily production of oil has increased by around 26,000 barrels a day to around 896,000 bpd of the black stuff. At current market prices of around $90, thats a nice $80,640,000 a day (RO 31,049,624.40). Anyway, enough with the boring numbers stuff. I do wonder if the budget is ever independently audited, or the reported production of oil for that matter?

Something to note however, is this: Oman is investing heavily in something called EOR (that means Enhanced Oil Recovery - it's many different techniques in getting oil out of the ground quicker, but here in Oman as far as I know the most widely used technique is steam injection, or Huff and Puff as people in the industry call it). EOR is typically used to get an oil field producing more oil than it would with traditional oil extraction methods. Yet Oman's historical annual production is fairly flat, because existing oilfields here in Oman are starting to mature and their production is declining.

So, this years budget is projecting oil revenues of about RO 7.230bn and is planing to spend RO 8.130, a deficit of RO 900 million rials. Ok some income will come from mineral and other exports as well, plus I figure oil will surpass the $100 per barrel price again this year (well thats what all the speculators seem to think). So Oman's pretty cashed up at the moment.

Oman's population is marching up, the 2010 Census' initial reports indicated an increase in the Omani population to 1,951,000, an increase of 9.48 per cent from the 1,782,000 count in 2003.

So, Oman is spending some big bucks to try and stimulate more jobs for Omanis, and quite rightly so. The key growth areas for spending this year are Health, Education and Transport. As far as I know there are no new major hospitals or universities planned, so I imagine the lions share of the budget proportioned to health and education will go to increasing services. As for transport... it's a big year coming up: The Airport, the new dualized road from Sur to Bid Bid being just two major projects ongoing throughout 2011. I wonder what will happen with the rail network this year?

Galfar's current share price is trading at RO 0.565 per share. Might be worth a punt for someone looking to invest.... or not :P

Thats all for today, more soon.

le fin.