WORLD TRADE
ORGANIZATIONG/STR/N/7/OMN
26 April 2001
(01-2097)
Working Party on
State Trading EnterprisesOriginal:  English
STATE TRADING
New and Full Notification Pursuant to Article XVII:4(a) of the GATT 1994
and Paragraph 1 of the Understanding on the Interpretation of Article XVII
SULTANATE OF OMAN
The following communication, dated 1 April 2001, has been received from the Ministry of
Commerce and Industry, Sultanate of Oman.
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The Public Authority for Stores and Food Reserv es (PASFR) is not a st ate trading enterprise
in terms of the definition in Article XVII of GATT 1994 and the Understanding on Interpretation of
Article XVII, as it has not been granted any exclusive or special rights or privileges in its purchases or
sales involving either imports or exports.
However, without prejudice to Oman's position, the following information in respect of
PASFR is being furnished to the WTO.
1. Enumeration of State Trading Enterprises
The Public Authority for Stores and Food Re serves (PASFR).  It is responsible for
maintaining reserves of rice, sugar, milk powder and edible oil.
2. Reasons and Purpose for the Formation and Maintaining of PASFR
The PASFR was established in 1980 to maintain st rategic food reserves to meet the essential
requirements of the population in an emergency.
3. Description of Functioning of PASFR
PASFR deals only in four items:  rice, sugar, milk powder and edible oil.  It maintains reserve
stocks of these items to meet the emergency requirements for four to six months.  The stocks are
regularly rotated, i.e. old stocks are sold in the market and these are replenished by new purchases.
PASFR purchases milk powder and edible oil from importers/traders in the Omani market.  It
does not import or export these two items.
PASFR, however, imports rice and sugar from abroad.  But it does not enjoy any exclusive or
special rights or privileges in the importation of rice and sugar.  Incidentally, it does not export theseG/STR/N/7/OMN
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items.  Rice and sugar are periodically sold in the open Omani market with a view to rotate and
replenish the stocks.  There is no fixed mark-up.
Private traders are allowed to import and export rice and sugar without any restrictions.  They
freely compete with PASFR and impor t on the same basis as PASFR.
There are no long-term contracts by PASFR for the import/purchase of the four commodities.
Purchases are made on the basis of open tenders.
4. Statistical information
The following quantities were imported by PASFR in the last three years.
1997 1998 1999 Commodity imported
PASFR M/T PASFR M/T PASFR M/T
Rice 27,000 17,000 28,039
Sugar 3,526 - 5,171
5. Reason why no foreign trade has taken place in products affected
Not applicable.G/STR/N/7/OMN
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None of the enterprises in the oil and gas sectors in the Sultanate of Oman fall within the
definition of State-Trading as given in Article XVII of GATT 1994 and the “Understanding on the
Interpretation of Article XVII of the General Agreement on Tariffs and Trade 1994”.
Notwithstanding this, the following information, as requested, is provided without prejudice to the
position of Oman on the status of the two enterprises.
1. Enumeration of State Trading Enterprises
1. PDO and ORC undertake the production and export of crude oil and long residue respectively,
on behalf of the Government of Oman.
Forty per cent of crude oil produced by PDO is purchased at the Government Selling Price by
the Private Shareholders of PDO and exported by PDO on behalf of the Government.  The balance of
60 per cent is sold partly as “Buyback” to the Private Shareholders of PDO and partly as “DirectSales” to other buyers for and on behalf of the Government.
All crude oil sales in the Sultanate of Oman are at Government Selling Prices (GSP).ORC, on the other hand, exports long residue on behalf of the Government at market prices.
Other refined products, such as gasoline (regular and premium), jet fuel, kerosene, LPG and diesel,
are sold locally at prices determined by the Government.  However, ORC is allowed to import and sell
products locally at Government Selling Prices during “shutdown” of the refinery for maintenance
work.
Notwithstanding the above, neither PDO nor ORC fall within the context of the definition of
State-Trading, as they do not have the exclusive or special rights or privileges which would enable
them to influence, through their purchases or sales, the level or direction of their exports.
2. Reason for and Purpose of the Information of PDO and ORC
1. The Concession Agreement, dated 7 March 1967, gives PDO the rights and obligations to
undertake all projects, operations and activities directly or indirectly related to the exploration,
development, extraction, transportation, storage a nd delivery of petroleum and/or petroleum products
to the Government.
2. Oman Refinery Company (ORC) was established as an Omani Limited Liability Company in
1982 by Royal Decree 7/82.  The purpose of the Company is to meet the local market demand of
refined petroleum products.
ORC is charged to procure crude oil from the Government for the production of refined
products in sufficient quantities to meet the local market demand.  In addition, the Company is to
carry out the sale of refined products to the Companies engaged in the distribution of these products to
consumers.
3. Description of the Functioning of PDO and ORC
1. PDO, as it exists now, has a concession to explore and produce crude oil.  PDO also acts as an
operator for the Government in the production and supply of natural gas within the Sultanate.  In
addition, PDO, on behalf of the Government, exports crude oil.
Besides PDO, there are other foreign oil companies with concessions in the Sultanate of
Oman to explore and exploit crude oil and natural gas on a Cost Recoverable basis.  These companiesG/STR/N/7/OMN
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are allowed to export oil equivalent to the amount  of money agreed for recovery (Recoverable Costs)
in any particular year.
Given the level of investments necessary for the exploration of oil and gas, there are currently
no private traders involved in the sectors, except MB Petroleum, a local Omani company, which hasrecently acquired an exploration and production concession in the country.
2. ORC is a 100 per cent Omani Government Commercial Limited Liability Company.  The
company is responsible for the processing of Omani crude into refined products necessary to meet
local demand.  However, the company exports Long Residue (fuel oil), which is associated with the
production from this refinery.
The Sultanate of Oman, as an oil producing country, generates a major part of its revenue
from oil.  In this respect, economics probably play  a part in determining the level of oil production,
taking into consideration the level of reserves and, within the context of good oil field practice, the
long-term sustainability of production.
The level of production and export of refined products are determined by local demand.
Products in excess of local demand (fuel oil) are exported.  International market forces determine
export prices.
All exports are on the basis of annual contracts between the Government (Supplier) and the
Buyer.G/STR/N/7/OMN
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4. Statistical Information
Product Imports Exports National production
Barrels US$ Barrels US$ Barrels US$
1998
Gasoline
(Mogas 97)449,866 18,759,412 – – 4,177,446 174,199,498
Unleaded
gasoline––––––
Gas Oil 86,832 3,620,894 319,117 9,573,510 6,030,248 251,461,342
LPG 117,489 2,359,179 – – 745,909 16,044,503
Long residue – – 11,746,869 121,932,500 13,911,449 144,400,841
Crude Oil – – 300,124,735 3,577,486,841 327,165,175 3,899,808,886
1999
Gasoline
(Mogas 97)1,420,926 59,252,614 – – 3,838,930 160,083,381
Unleaded
gasoline1 3 , 9 4 7 6 0 7 , 9 5 0––––
Gas Oil 98,672 4,114,622 494,764 14,842,920 6,296,995 262,584,692
LPG 90,870 1,370,320 17,916 426,042 811,822 17,462,291
Long residue – – 8,130,708 127,408,194 7,995,445 125,288,623
Crude Oil – – 307,676,577 5,338,188,611 329,208,336 5,711,764,630
2000
Gasoline
(Mogas 97)1,116,129 46,542,579 – – 3,903,547 162,777,910
Unleaded
gasoline2 0 , 9 1 3 9 2 1 , 2 1 8––––
Gas Oil 275,155 11,473,964 166,960 5,008,800 6,362,676 265,323,589
LPG – – 1,044,682 27,203,519 1,091,275 23,473,325
Long residue – – 7,176,506 171,805,554 7,639,901 182,899,230
Crude Oil – – 328,985,220 8,787,195,226 348,508,904 9,308,672,826
Note:
1. Revenues for Gasoline (Mogas 97), Gas Oil and LPG are on the basis of Average Local Prices.2. Revenues for Long Residue and Crude Oil are on the basis of Average Export Prices.
Source: Ministry of Oil and Gas – Director of Petroleum ProductsG/STR/N/7/OMN
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5. Reasons why no Foreign Trade has Taken Place
1. Not applicable.
6. Additional Information
2. None.
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