Oil, discovered in 1964 in western Oman, has transformed the nation's economic life. As of 1998, oil export revenues totaled $5.2 billion and accounted for 80% of all export revenues. When production began in 1967, several foreign interests combined to form a majority backing in Petroleum Development Oman (PDO). In July 1974, foreign participation dropped to 40%, with the remaining 60% held by the government. PDO was the lone oil producer in the country until the Elf-Sumitomo-Wintershall group was granted a concession in 1980. Oman is unlike the other Middle Eastern oil producers, because its oil was discovered decades after that of most of its neighbors, and its oil fields are generally smaller, less productive, and more costly to maintain. Also, Oman is not a member of Organization of the Petroleum Exporting Countries (OPEC), but a leader in IPEC, the main independent petroleum exporter's organization. In 1998, however, Oman cooperated with OPEC in reducing its oil production to help stabilize world oil prices.
Output of oil in 2001 averaged 963,816 barrels per day. Petroleum reserves were estimated at 5.5 billion barrels in early 2002, enough to last until around 2020 at the current rate of production. Proved reserves of natural gas were estimated to be 829.5 million cu m (29.2 billion cu ft) at that time (over 100 years' supply at current production levels), and it is anticipated that Oman will increasingly replace oil with gas as fuel. The 6.6-million-ton per year liquefied natural gas (LNG) plant at Qalhut began exporting liquefied natural gas in early 2000.
With limited oil reserves, Oman is currently trying to reduce its reliance on oil as the chief source of revenue. Oman is trying to establish itself as a consultant to other independent oil and natural gas producing nations, like Kazakhstan and India.
In 2001, total installed electric capacity was 2,410,000 kW. Production in 2000 totaled 8.6 billion kWh, of which 100% was from fossil fuels.