Buoy­ant oil prices have re­duced the siz­able debt that the Sul­tanate had ac­cu­mu­lated over the past three years post the 2014 oil price crash. New dis­cov­er­ies have now scaled up Oman’s gas re­serves to 25 tril­lion cu­bic feet (TCF). Oom­men John P re­ports

Oil and Gas - - CONTENT -

Ris­ing oil prices and com­par­a­tively bet­ter rates of oil and gas pro­duc­tion in Oman are ex­pected to pro­vide a sig­nif­i­cant boost to the econ­omy dur­ing the last quar­ter of 2018 and mov­ing ahead in 2019.

The strong rally in crude prices, which have re­mained well above the $55 per bar­rel mark as­sumed by the gov­ern­ment as the ba­sis for Oman’s Bud­get 2018, has carted away the siz­able debt that the Sul­tanate had ac­cu­mu­lated over the past three years post the oil price cash in 2014. Fol­low­ing the re­cov­ery in oil prices, com­bined with gov­ern­ment­driven ef­forts at fis­cal con­sol­i­da­tion, the fis­cal deficit de­clined from RO 5.300 bil­lion in 2016 to RO 3.760 bil­lion in 2017. Ac­cord­ing to the Cen­tral Bank of Oman (CBO), the deficit is pro­jected to fur­ther de­cline to RO 3 bil­lion in 2018. The im­prov­ing crude prices is cer­tain to spur the gov­ern­ment to spend more thereby stim­u­lat­ing pri­vate sec­tor growth and cre­ation of em­ploy­ment op­por­tu­ni­ties.

Gov­ern­ment’s to­tal rev­enues rose 23.5 per cent to RO4.94bn in the first half of 2018 from RO4bn in the same pe­riod of the pre­vi­ous year, mainly lifted by higher oil and gas rev­enues. At the same time, to­tal pub­lic ex­pen­di­ture in­creased 5.7 per cent to RO5.96bn, the Na­tional Cen­tre for Sta­tis­tics and In­for­ma­tion (NCSI) data showed.

Boosted by higher oil prices Oman’s net oil rev­enue surged 34.7 per cent to RO2.92bn in the first six months of 2018, while gas rev­enue rose 25.9 per cent to RO859.5mn. The av­er­age price at which Oman sold its crude dur­ing Jan­uary – July pe­riod rose to $65.4 per bar­rel com­pared with $51.6 per bar­rel in the pre­vi­ous year. Oman pro­duced 969,600 bar­rels per day (bpd)

of oil dur­ing the first seven months of 2018, slightly higher than 968,500 bpd recorded for the same pe­riod a year ago.

“The Sul­tanate will con­tinue to de­velop new oil and gas projects ir­re­spec­tive of the prices,” ac­cord­ing to HE Salim bin Nasser Al Aufi, Un­der­sec­re­tary at the Min­istry of Oil and Gas. “Our sys­tem is re­silient enough to pro­duce oil even if prices drop,” he says. 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. The Sul­tanate’s oil and con­den­sate re­serves stood at 4740 bil­lion bar­rels at the end of 2017 down by 376 mil­lion bar­rels in 2016 de­spite the ad­di­tion of 355 mil­lion bar­rels of oil and con­den­sate from ex­plo­ration ac­tiv­i­ties and reval­u­a­tion of some pro­duc­ing fields. The de­cline is at­trib­uted to the trans­fer of around

323 mil­lion bar­rels of re­serves into re­cov­er­able quan­ti­ties based on re­cov­ery in prices.

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 price of the Oman Crude Oil Fu­tures Con­tract

av­er­aged $51.29 in 2017, which was up by $11.15 per bar­rel over 2016. While the high­est price of $55.59 per bar­rel was recorded in De­cem­ber 2017, the low­est was $44.54 per bar­rel reg­is­tered in Jan­uary 2016. The daily gas pro­duc­tion in ad­di­tion to quan­ti­ties im­ported from Dol­phin av­er­aged 112 mil­lion cu­bic me­tres per day, of which 88 mil­lion cu­bic me­ters was non-as­so­ci­ated gas and 19 mil­lion cu­bic me­tres of as­so­ci­ated gas and 5 mil­lion cu­bic me­tres of gas im­ported via the Dol­phin, Aufi said.

The Sul­tanate’s oil and gas ex­pen­di­ture amounted to $11.4 bil­lion in 2017, as against $11.3 bil­lion in 2016. The to­tal oil sec­tor ex­pen­di­ture was $7.9 bil­lion in 2017, which was sim­i­lar to $7.9 bil­lion in 2016. The gas sec­tor ex­pen­di­ture was $3.5 bil­lion, against $3.4 bil­lion in 2016. Four oil blocks have been opened for ten­der­ing in the last quar­ter of 2017 and the min­istry is cur­rently in the process of eval­u­at­ing the ten­ders sub­mit­ted by lo­cal and in­ter­na­tional com­pa­nies. The oil and gas sec­tor has been man­dated to cre­ate 5000 jobs for Oma­nis in re­sponse to the Royal Di­rec­tives of His Majesty to the pub­lic and pri­vate sec­tors to pro­vide 25,000 jobs for Omani job­seek­ers. How­ever, we are con­fi­dent of go­ing be­yond that, HE Aufi adds. Mean­while, Oman Oil Com­pany (OOC), a com­mer­cial com­pany wholly owned by the gov­ern­ment, is keen to ex­plore the po­ten­tial for part­ner­ships with lo­cal and in­ter­na­tional in­vestors es­pe­cially in power and re­new­able en­ergy in the Sul­tanate. OOC and Eni signed a MoU for co­op­er­a­tion in the oil and gas sec­tor and an­other agree­ment was signed with Kuwait Petroleum In­ter­na­tional Lim­ited (KPI) for the de­vel­op­ment of Duqm Re­fin­ery and Petro­chem­i­cal com­plex.

Oman Oil Re­finer­ies and Petroleum In­dus­tries Com­pany’s (Or­pic’s) strate­gic growth projects that in­clude Suhar Re­fin­ery Im­prove­ment Project (SRIP), Mus­cat Suhar Prod­uct Pipe­line (MSPP) and Liwa Plas­tics In­dus­tries Com­plex (LPIC) are ex­pected to trans­form

Or­pic’s busi­ness model and prod­uct mix over the next years and will firmly re­in­force Or­pic as a recog­nised player in the in­ter­na­tional petro­chem­i­cals mar­ket­place. The com­bi­na­tion of the three projects rep­re­sents a growth strat­egy that re­volves around in­creased in­te­gra­tion within the man­u­fac­tur­ing com­plex, and the pro­duc­tion of a broader slate of petro­chem­i­cal prod­ucts that will en­able Or­pic to ex­tract more value from the oil and gas mol­e­cules of Oman.

En­ergy gi­ant BP has said that achiev­ing first gas from Khaz­zan Phase One is just the first step. Fur­ther de­vel­op­ment is needed in Khaz­zan and in the ad­join­ing Ghazeer field to boost pro­duc­tion to 1.5 bil­lion cu­bic feet of gas per day by 2021.

En­ergy com­pa­nies in the Sul­tanate have been spend­ing a lot as part of their InCoun­try Value (ICV) com­mit­ments.

ICV has been a key ele­ment in many of the projects in or­der to ex­tend the high­est value for the com­mu­nity through Oman­i­sa­tion, us­ing lo­cally pro­duced ma­te­rial and equip­ment, and as­sign­ing projects to SMEs. Hence, SMEs will con­tinue to play a sig­nif­i­cant part in the de­vel­op­ment of the oil and gas sec­tor in the years ahead.

The Sul­tanate is fo­cus­ing a lot on pro­duc­ing so­lar and wind en­ergy. Re­new­able en­ergy def­i­nitely presents an enor­mous op­por­tu­nity for Oman.

And PDO is com­mit­ted to play­ing its part in help­ing to po­si­tion the Sul­tanate as a re­gional leader and to de­velop the na­tion as a re­new­able en­ergy cen­tre of ex­cel­lence and tech­nol­ogy hub. PDO it­self es­ti­mates that 15 per cent of its power re­quire­ments will be com­ing from re­new­ables by 2030, with some say­ing that fig­ure could go as high as 30 per cent. Cer­tainly, the rise in crude prices in the re­cent past, has promis­ing im­pli­ca­tions for Oman’s fis­cal con­di­tion.

Newspapers in English

Newspapers from Oman

© PressReader. All rights reserved.