 
  WORLD TRADE  
ORGANIZATION  G/STR/N/9/OMN 
29 January 2004 
 (04-0325) 
Working Party on 
State Trading Enterprises Original:   English 
 
 
 
STATE TRADING 
 
Updating 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 24 January 2 004, is being circulated at the request of the 
Delegation of the Sultanate of Oman.  
_______________ 
 
 
 The Public Authority for Stores and Food Reserve s (PASFR) is not a state-trading enterprise 
in terms of the definition in Article XVII of GATT 1994 and the Understandi ng 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 positi on, 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 R eserves (PASFR).  It is responsible for 
maintaining reserves of rice, sugar, milk powder and edible oil. 
 2. Reasons and Purpose for the Fo rmation and Maintaining of PASFR
 
  The PASFR was established in 1980 to maintain  strategic 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 requir ements 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 abro ad.  But it does not enjoy any exclusive or 
special rights or privileges in the importation of ri ce and sugar.  Incidentally, it does not export these G/STR/N/9/OMN 
Page 2  
 
 items.  Rice and sugar are periodically sold in th e open Omani market with a view to rotating and 
replenishing 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 import 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. 
 
2000 2001 2002 Commodity imported 
PASFR M/T PASFR M/T PASFR M/T 
Rice 16,000 7,808 42,525 
Sugar 10,191 4,859 5,117 
 
5. Reason why no foreign trade has taken place in products affected  
 
 Not applicable.   
* * * * * 
 
 None of the enterprises in the oil and gas sect ors 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 Genera l 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 is a company formed for the purpose of conducting Petroleum Operations on behalf of 
the shareholders (the Government, and POHOL whic h is owned by Shell, CFP and Partex being the 
concession holders).  ORC exports long residue on its own behalf. 
  40 per cent of crude oil produced by PDO is purchased at the Government Selling Price by the Private Shareholders of PDO and exported by PD O 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 "Direct Sales" 
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 "Bumper Fuel Oil 180 cst" on behalf of the 
Government at market prices.  Other refined produ cts, 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.   G/STR/N/9/OMN 
 Page 3 
 
 
  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 the Purpose of the Formation 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 direc tly or indirectly related to the exploration, 
development, extraction, transportation, storage a nd delivery of petroleum to the Government and the 
former PD(O) Ltd., in accordance with the direction given to PDO. 
 
2. Oman Refinery Company (ORC) was establis hed as an Omani Limited Liability Company in 
1982 by a 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 Compan ies 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 co mpanies with concessions in the Sultanate of 
Oman to explore and exploit crude oil and natural gas on a cost recoverable basis.  These companies 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 has 
recently 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 Oman i crude into refined products necessary to meet 
local demand.  However, the company exports Long Residue (bumper fuel oil), which is associated 
with the production from this refinery.   The Sultanate of Oman, as an oil producing co untry, 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 e xport of refined products are de termined by local demand.  
Products in excess of local demand (bumper fuel oil, jet fuel and diesel) are exported.  International 
market forces determine export prices. 
 
 All exports with the exception of jet fuel and diesel, are on the basis of annual contracts between the Government (Supplier) and the Buyer.  G/STR/N/9/OMN 
Page 4  
 
 4.   Statistical Information
 
 
Unit Metric Ton* 1,000 
 DPK Kerosene 2001 2002 2003 
JFO1 Gross production 187 252 217 
JFO3 Imports 14 108 102 
JFO Exports 11 0 104 
JFO5 Bunkers International 0 0 0 
 
Unit Metric Ton* 1,000 
 LPG 2001 2002 2003 
LPG1 Gross production 33 29 48 
LPG3 Imports 0 0 0 
LPG4 Exports 8 14 4 
 
 
Unit Metric Ton* 1,000 
 Motor Gasoline 2001 2002 2003 
MO1 Gross production 496 706 642 
MO3 Imports 219 183 185 
MO4 Exports 0 0 0 
 
 
Unit Metric Ton* 1,000 
 Fuel Oil 2001 2002 2003 
RFO1 Gross production 1,771 2,209 2,259 
RFO3 Imports 0 0 0 
RFO4 Exports 1,706 2,104 640 
 
 
Unit Metric Ton* 1,000 
 Gas Oil 2001 2002 2003 
DLO1 Gross production 713 889 878 
DLO3 Imports 152 80 0 
DLO4 Exports 11 20 194 
 
 5. Reasons why no Foreign Trade has taken place
 
  Not applicable.  
6. Additional Information
 
  None.  
__________ 
 
  