The trade and investment relationship between the United Kingdom and Oman has reached new heights, with the UK consolidating its position as the largest source of foreign direct investment (FDI) into Oman. Since 1970, the UK has contributed 51.2% of all cumulative FDI into Oman, amounting to approximately £28.9 billion. This partnership has strengthened significantly since the two nations signed a Sovereign Investment Partnership in 2022, which has spurred an additional £8.7 billion in investments from the UK. Notably, £4.5 billion of this investment was made in 2024 alone, a figure that surpasses the combined lifetime investments from Germany, China, Qatar, and the UAE into Oman.
Trade Relations: A Two-Way Street
Trade between the UK and Oman has also seen remarkable growth. In 2024, UK exports to Oman totalled £1.2 billion, evenly split between goods and services. Excluding defence exports, this marks the highest level of UK exports to Oman in history. On the other hand, Oman exported £400 million worth of goods to the UK during the same period, a 33.8% increase compared to the previous year. Given the 15:1 population ratio between the UK and Oman, it is an incredible achievement that Omani exports make up 25% of the trading relationship. Notably, Oman's exports to the UK are predominantly non-hydrocarbon, reflecting a diversification of its economy.
Diversification Beyond Oil and Gas
While oil and gas have traditionally dominated the economic ties between the two nations, UK firms are now venturing into new sectors, signalling a shift towards a more diversified investment portfolio.
Green Hydrogen: A Promising Frontier
Oman has positioned itself as a global leader in green hydrogen production, signing significant concession agreements with eight international consortiums over the past year. British companies lead five of these consortiums, each expected to invest £4 billion by 2040. These investments are projected to create thousands of jobs and stimulate the development of local supply chains across Oman. Importantly, these future investments are not yet reflected in the current FDI statistics, indicating even greater potential for growth in the coming decade.
Telecommunications: A Landmark Deal
In the telecommunications sector, Oman's state-owned Omantel privatised part of its telephone mast network last year. UK-based FTSE 250 company Helios Towers acquired this network, injecting £400 million into Oman's economy. This single transaction is larger than the total historical investments from most countries, underscoring the UK's significant role in Oman's telecommunications infrastructure.
Education: Building Bridges Through Learning
Education has also become a key area of collaboration. Over the past two years, four British-linked schools have opened in Oman, all in partnership with UK private schools. These institutions offer a hybrid education model, blending British curricula with an Omani framework, fostering cultural exchange and educational excellence.
Mining: Tapping into Oman's Mineral Wealth
UK firm Knights Bay has made history by becoming the first foreign company to be awarded a mining concession in Oman. The company is currently conducting detailed surveys to assess Oman's mineral potential, paving the way for future investments in the mining sector.
Space: A New Frontier for Collaboration
In the burgeoning space sector, UK Launch Services Ltd is collaborating with Omani spaceport NASCOM to design the Etlaq spaceport in Duqm. This project marks the first major Omani contract in the space industry, highlighting the potential for future cooperation in this high-tech field.
Conclusion
The UK-Oman economic partnership is thriving, with record-breaking investments and a diversification into new sectors such as green hydrogen, telecommunications, education, mining, and space. As both nations continue to build on this strong foundation, the future looks promising for further collaboration and mutual economic growth. The Sovereign Investment Partnership signed in 2022 has already yielded significant results, and with ongoing projects and future investments, the UK and Oman are set to deepen their economic ties in the years to come. And with Free Trade Agreement (FTA) negotiations between the UK and the Gulf Cooperation Council continuing, excitement continues to build; with the UK Government estimating that a successful FTA would increase trade flows by 16%.
Quote from Michael Eyley, Director of Trade and Investment at the British Embassy in Muscat:
"The huge increase and diversification in UK trade and investment since the UK and Oman signed a Sovereign Investment Partnership in January 2022 is super exciting; and for me, two extra strands stand out:
1) regionality: UK firms are investing all across the Sultanate – not just Muscat. And 78% of the goods that the UK exports to Oman originate from outside London and the South East of England.
2) job creation: investment = jobs. And many of the new UK firms who are investing in Oman (many mentioned above) are creating new Omani jobs before their projects really kick in.
A successful FTA between the UK and the GCC would transform this further – watch this space!"
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