Transforming to Energy Infrastructure heavyweight

Oman Gas Company (OGC) is preparing to take on a more robust mandate at the helm of the Energy Infrastructure vertical of the restructured Oman Oil Group

For long the nation’s gas transportation utility, Oman Gas Company (OGC) is being primed for an ambitious role within the restructured Oman Oil Company’s (OOC) vision to serve as one of the prime movers of the Sultanate’s economic growth.

A roadmap adopted by the wholly government-owned investment group’s Board of Directors envisions a dramatically invigorated remit for the utility, encompassing not only responsibility for the Group’s midstream gas infrastructure, but oil and power infrastructure business streams as well.

“It’s a far-reaching mandate that will place OGC on a growth trajectory with potentially global ambitions,” said Sultan Hamad Al Burtmani, Acting Executive Managing Director of OGC. “OGC will head the Group’s Energy Infrastructure businesses distributed across three main streams – Gas, Oil, and Power.” Our goal is to emerge as the undisputed leader in the gas infrastructure business in the region.”

Indeed, OGC has already taken the first

OGC will head the Group’s Energy Infrastructure businesses distributed across three main streams – Gas, Oil, and Power. Our goal is to emerge as the undisputed leader in the gas infrastructure business in the region

steps in its evolution into a globally renowned energy infrastructure utility. Recently, the company hosted highprofile officials and visiting executives at a signoff ceremony to pave the way for the establishment of Oman’s first Liquefied Petroleum Gas (LPG) extraction plant in Salalah. The $820 million project, to be located at Salalah Free Zone, will be owned and operated by Salalah LPG SFZCO, a 100 per cent subsidiary of OGC.

The LPG project exemplifies OGC’s newly invigorated strategy to maximise value creation from Oman’s hydrocarbon resources at the midstream end of the value chain, says the Acting EMD.

“One of our key responsibilities is to ensure that the requisite infrastructure is in place not only to ensure reliable and uninterrupted natural gas supply to consumers wherever they are in the country, but also to support the optimisation of value generation from this resource. The LPG plant will extract valuable propane, butane and condensate elements from rich gas to produce LPG for local and international markets – a task mandated to OGC to implement and manage,” Al Burtmani explained.

DRIVING GROWTH

As the chosen platform to drive the growth of Oman Oil Company’s Energy Infrastructure Vertical, OGC will assume broad responsibility for a wide swathe of the Group’s infrastructure businesses – present and future. These businesses, says the Acting EMD, are categorised into three ‘pillars’ centring on the Group’s Gas, Oil and Power infrastructure activities.

Not surprisingly, the Gas pillar has a muscular mandate, spanning the transmission, processing and distribution aspects of the gas business. “The primary focus with regard to our gas infrastructure business stream is to develop, expand, modernise and consolidate the countrywide gas transportation network. Included in this scope is infrastructure that will be required when imports of gas from overseas sources become a reality,” says Al Burtmani.

In line with its fundamental objective to become the backbone of the Omani gas industry, OGC is weighing a major revamp of its structure into a regulated utility,” says the Acting EMD. “Our goal is to consolidate our gas transmission network assets into an integrated gas transmission operator, and then discuss with the government our conversion into a regulated business, similar to how energy infrastructure utilities operate in Europe. This will result into implementing a new revenue model known as the Regulated Asset Base (RAB), which is a framework used for setting the allowed revenue and tariffs for gas transportation services, and hence give OGC the room to efficiently operate gas network under one entity.

OGC is implementing a slew of gas pipeline projects that will add around 600 km of new pipeline capacity to the company’s sprawling, countrywide gas network. According to Al Burtmani, new gas pipelines are under construction in the north and southeast of the Sultanate to help support the growing energy requirements of existing and emerging industrial hubs.

“In another few years, we will see another 500 – 600 km of pipelines added to OGC’s gas network, catering to the new industrial hub in Duqm, as well as to meet demand growth in the Sohar area,” Al Burtmani says. “This will take the total length of our gas network to well over 3,000 km,” he stated.

Opportunities to grow its midstream gas infrastructure business abound with the Salalah LPG extraction project now under its belt, OGC has set its

eyes on another exciting portfolio of initiatives that will consolidate its role as the preeminent gas operator in the Sultanate. This was recently materialized after signing an agreement with Oman Oil Refineries and Petroleum Industries Company “Orpic” to operate and maintain the Natural Gas Liquid Extraction “NGLE” plant located in Fahud which is the upstream of Orpic’s mammoth Liwa Plastics Industrial Complex (LPIC) project in Sohar Port. A roughly 300km pipeline connecting the Fahud NGLE plant with the Sohar complex will be operated and managed by OGC as well. This opportunity will develop OGC’s Operations & Maintenance (O&M) capabilities on a world scale Oil & Gas process facilities and leverage that into future projects.

Equally promising is the growth potential of OGC’s Oil Infrastructure business. Brought within the purview of this stream are the following subsidiaries and investments of the Group: Oman Oil Marketing Company (OOMC), Oiltanking Odfjell Terminals (Sohar), Oman Tank Terminal Company (OTTCO), and Oman Shipping Company SAOC.

“We are also working closely with Oman Oil and other stakeholders to consolidate our oil-related infrastructure asset under one Omani oil logistics company. The goal here is to operate the liquid jetties in Sohar, Duqm and Salalah under one Omani brand, while leveraging our capabilities to expand the oil logistics business.”

Set to play a high-profile role along this path is OTTCO, which is behind the Omani government’s ambitious plan to develop a mega Crude Oil Storage Park at Ras Markaz not far from the equally world-scale Special Economic Zone (SEZ) at Duqm. OTTCO recently signed a usufruct agreement with the SEZ Authority at Duqm (SEZAD) effectively acquiring the exclusive concession to develop crude storage facilities at the Ras Markaz hub.

OGC’s vision for the Ras Markaz complex is strategic and long-term, according to Al Burtmani. “Our first customer will be Duqm Refinery, which is building a greenfield 230,000 barrels per day capacity refinery at the SEZ, but we will also be looking into expanding the business by offering strategic crude oil storage capacity to other clients – local and international. There is also a goal to build a crude pipeline that links the Main Oil Line with Ras Markaz – initiatives that will be pursued as part of the Oil Infrastructure pillar of the OGCled vertical.”

Finally, there is the Power Infrastructure pillar – a business stream that promises to be just as exciting as OGC’s Gas and Oil pillars. Already, the first investment of this business stream has entered service with Musandam Power Company recently brought its dual-fuel power generation plant into commercial operation at Tibat in Musandam Governorate. The 120 MW facility will be primarily powered by natural gas – a first in the governorate – supplied by a nearby gas plant owned and operated by Oman Oil Company

E&P (OOCEP); a sister firm of OGC. At the same time, the Centralised Utilities Company (Marafiq) is gearing up to deliver an estimated 300 MW power plant to serve the energy requirements of Duqm Refinery and other projects planned at the SEZ, according to the Acting EMD. In long term, the Power Infrastructure pillar will look at investment in power generation schemes based on conventional fuels and renewables, he says. The company’s capital expenditure in this strategical shift is about $3 billion, which translates how OGC’s transmission into a dynamic Energy Infrastructure Group is well and truly underway with transformation programmes being identified and commenced to get our people and systems ready for this promising diversion.

Underpinning this transition are three primary objectives: To build on its capabilities as the nation’s gas transmission network operator, Diversity into the energy markets business, and finally, Explore partnerships with leading international players to develop the Group’s presence regionally and internationally, Al Burtmani adds.

OGC’s vision for the Ras Markaz complex is strategic and long-term.Our first customer will be Duqm Refinery, which is building a greenfield 230,000 barrels per day capacity refinery at the SEZ, but we will also be looking into expanding the business by offering strategic crude oil storage capacity to other clients – local and international