Regulatory overview

Regulation

What are the primary laws and regulations governing the oil and gas industry in your jurisdiction?

The Oil and Gas Law (Royal Decree 8/2011) is the key piece of legislation in the oil and gas sector. The law sets out broad and general obligations for parties that are granted interest in hydrocarbon assets in Oman. To date, the executive regulation of the Oil and Gas Law has not been issued. Rights to explore and exploit oil and gas assets of the sultanate of Oman are granted pursuant to exploration and production sharing agreements (EPSAs), which set out the detailed rights and obligations of parties that have been granted the rights to explore or exploit hydrocarbons in Oman.

What government bodies are charged with regulating the oil and gas industry and what are the extent of their powers?

The Council for Financial Affairs and Energy Resources, acting in conjunction with the Ministry of Oil and Gas (pursuant to Royal Decree 60/1996) and its various departments, directs activities relating to the exploration and extraction of oil. The Directorate General of Petroleum and Mineral Resources at the Ministry of Oil and Gas can grant permits for these activities.

As per Royal Decree 37/97, the Council of Financial Affairs and Energy Resources:

  • considers state investments in oil and natural gas;
  • formulates the general policy regulating the production and transport of oil and natural gas;
  • decides the grounds on which oil sale costs are determined;
  • fixes gas sale prices for the purposes of local consumption; and
  • supervises the Oil Reserve Fund.

As per Royal Decree 2/2008, the Ministry of Oil and Gas:

  • prepares and carries out studies, plans and policies to ensure the optimum use of oil and gas wealth;
  • manages and supervises the necessary surveys of oil and gas wealth sources and the necessary economic studies for any projects relating to their exploitation in coordination with the concerned government entities;
  • supervises all activities relating to researching and drilling for oil and gas and any production therein by companies awarded concessions;
  • conducts studies on international oil and gas market conditions, which are used when formulating crude oil and natural gas production marketing policies;
  • concludes agreements with specialised companies and supervises their implementation of the terms and conditions therein;
  • protects the sultanate’s interests with specialised companies operating in the oil and gas industry and ensures that these companies abide by all applicable laws;
  • manages and supervises government investments in Omani oil and gas sector in coordination with the concerned government entities;
  • prepares draft laws and regulations to govern the functioning of the oil and gas sector;
  • represents the sultanate at international platforms relating to the oil and gas sector; and
  • coaches and trains individuals to undertake various ministry work.