A surge in oil prices and the country's output boosted Oman's hydrocarbon revenues by more than 48 per cent to a record level in 2008 and allowed to net its highest ever budget surplus, official data showed yesterday.

From around RO3.67 billion (Dh35 billion) in 2007, the Gulf nation's crude export earnings shot up by 48.4 per cent to RO5.45bn in 2008, showed the figures by the Omani Ministry of National Economy.

Gas revenues also swelled by nearly 12 per cent from RO810 million to nearly RO909m in the same period.

The increase in the hydrocarbon earnings boosted Oman's total income to its highest ever level of RO7,984.2m last year from around RO5.6bn in 2007, the report showed.

It gave no reason for the surge in the oil income but crude prices soared by nearly 40 per cent to an average $95 in 2008 from $68 in 2007. Oman's oil production also grew by more than six per cent from around 710,000 barrels per day in 2007 to nearly 756,000 bpd in 2008 as a result of an ongoing expansion programme aimed at reversing a steady decline in oilfield output because of lack of investments over the previous years.

But the average crude output last year fell short of the 790,000 bpd target set by the government in its 2008 budget and was far below the peak output of around 900,000 bpd recorded in 2002.

Higher earnings last year allowed Oman to record its highest ever budget surplus of around RO1.5bn despite a sharp rise in actual spending to a record RO6,404.1m.

Buoyed by the large surplus, Oman has joined the UAE and Saudi Arabia in approving a record 2009 budget of RO6.424bn compared with a budgeted expenditure of RO5.8bn in 2008.

Revenues were also estimated higher at RO5.614bn in 2009 compared with projected earnings of RO5.4bn in 2008. Experts believe actual revenues will not record any major increase through the year as Oman assumed an oil price of around $40-$45, almost the same average projected by most experts for this year.

Oman, which is not a member of the 12-nation Opec boosted its oil output by more than 40,000 bpd in 2008. Production had steadily receded over the previous years, dropping from a peak of 328 million barrels in 2002 to 299 million barrels in 2003 and 285 million barrels in 2004. It reached 283 million barrels in 2005 and 269 million barrels in 2006.

In 2007, the government announced plans to invest nearly $10bn (Dh36.7bn) until 2011 to lift crude output capacity to 900,000 bpd and increase gas supplies.

Like other Gulf oil producers, strong oil prices have turned Oman's fiscal deficits into surpluses over the past six years and sharply boosted growth its economy, which galloped by nearly 13 per cent from about RO13.73bn in 2006 to RO15.5bn in 2007. The nominal GDP leaped by around 52 per cent in the first nine months of 2008 and was expected to swell by at least 25 per cent through the year.

Oman's proven oil and gas reserves were estimated at the end of 2008 at around five billion barrels and 30 trillion cubic feet respectively.

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