BRIGHT PROSPECTS

Oil and Gas - - EDITOR’S NOTE - Oom­men John P Deputy Ed­i­tor

The Sul­tanate’s gas in­dus­try was born with PDO’s Yibal Gas Plant which was of­fi­cially opened by His Majesty Sul­tan Qa­boos bin Said on Oc­to­ber 29, 1978. Since then, PDO has been find­ing gas fields, de­vel­op­ing them into pro­duc­tive as­sets and trans­port­ing gas by pipe­line for do­mes­tic use and ex­port. The com­pany’s gas port­fo­lio has now evolved into a fully-fledged, com­plex op­er­a­tion, suc­cess­fully over­com­ing mul­ti­ple chal­lenges. PDO has sup­plied the gas that has fu­elled the coun­try’s eco­nomic progress. It has been used to gen­er­ate elec­tric­ity, de­sali­nate sea water for Omani homes and busi­nesses, and pro­vide fuel for cook­ing. It has also served as feed­stock for a grow­ing num­ber of lo­cal in­dus­tries, such as the smelt­ing of alu­minium and pro­duc­tion of fer­tiliser. In ad­di­tion to pro­duc­ing gas, PDO has also made great strides in con­serv­ing it, im­ple­ment­ing ground­break­ing schemes such as the Mi­raah so­lar in­stal­la­tion and the Nimr Reed Beds project. The com­pany has also com­mit­ted to meet the World Bank’s “Zero Rou­tine Flar­ing by 2030” tar­get well be­fore the dead­line year, with in­no­va­tive as­set flar­ing re­duc­tion projects and new tech­nol­ogy de­ploy­ment, such as mi­cro­tur­bines to con­vert flare gas into elec­tric­ity.Gas has cer­tainly fu­elled and en­abled do­mes­tic and in­dus­trial de­vel­op­ment and ex­port rev­enues for liq­ue­fied nat­u­ral gas (LNG) ex­ports. De­vel­op­ment of com­plex oil and gas de­vel­op­ment projects, such as Rabab Har­weel and Yibal Khuff bodes well for the econ­omy and has pro­vided the con­fi­dence and ca­pa­bil­ity to iden­tify, drive and sup­port ex­pan­sion plans for the fore­see­able fu­ture. Driv­ing forth the pos­i­tive out­look, Petroleum De­vel­op­ment Oman (PDO) has con­firmed a “sig­nif­i­cant” gas find with es­ti­mated re­cov­er­able re­serves of more than four tril­lion cu­bic feet (TcF) and 112 mil­lion bar­rels of con­den­sate in the north­ern part of its con­ces­sion area. BP Oman, the op­er­a­tor of the largest un­con­ven­tional gas project in the Mid­dle East – a gas project called Khaz­zan pro­duces a sig­nif­i­cant sup­ply of Oman’s gas. Af­ter four years of field de­vel­op­ment, First Gas from Khaz­zan was de­liv­ered on time and un­der bud­get in Septem­ber 2017. The Khaz­zan and Ghazeer de­vel­op­ments are ex­pected to de­liver to­tal pro­duc­tion of 10.5 tril­lion cu­bic feet of gas and around 350 mil­lion bar­rels of con­den­sate through the end of con­ces­sion. The to­tal life­time cap­i­tal ex­pen­di­ture for the Khaz­zan and Ghazeer gas fields is es­ti­mated at $16 bil­lion, with some 300 wells be­ing drilled through the es­ti­mated op­er­a­tion age for the two stages. The Sul­tanate’s to­tal gas re­serves stood at 24.96 tril­lion cu­bic feet (TCF) by the end of 2017, pri­mar­ily at­trib­uted to Khaz­zan and Ghazeer fields. Around 4.97 TCF of new re­serves were added in 2017, up from 3.81 TCF in 2016. Oil and con­den­sate pro­duc­tion av­er­aged 972,000 bar­rels per day in 2017, down from 1004K in 2016 demon­strat­ing the Sul­tanate’s com­pli­ance with OPEC agree­ment to cut pro­duc­tion. The Oman Gov­ern­ment’s firm re­solve to con­tinue de­vel­op­ing new oil and gas projects ir­re­spec­tive of the crude oil prices shows the pos­i­tive out­look for the econ­omy ahead. In this spe­cial edi­tion, Oil and Gas Re­view tracks PDO’s jour­ney over the past 40-years in gas pro­duc­tion and looks at how it is get­ting ready for the fu­ture. OGR would like to com­mend PDO’s Ex­ter­nal Af­fairs and Value Cre­ation Di­rec­torate- Mo­hammed Al Gha­reebi, Ab­dul-Amir Al Ajmi, Ian Ford, David Brown, Usama Al Harthi, Ikhlas Al Waili, Hamed Al Ham­dan, Karima Farid, Saleh Al Alawi, Yaqoub Al Mu­fargi, Samah Al Rawahi and Heyam Al Farsi for their con­stant sup­port. We also would like to thank other stake­hold­ers such as BP Oman, Oman Gas Com­pany, Oman LNG and Hal­libur­ton who have been as­so­ci­ated with the gas sec­tor in Oman.

En­joy read­ing the is­sue!

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