Under pressure: Oman to launch new fields, import gas from Qatar Domestic gas output to peak at 80-90 mcm/d in five years
Posted: 11 December 2007
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Oman is set to import gas from Qatar through the Dolphin pipeline and commission new gas fields to feed its hungry LNG plant in the south and growing industries and other sectors, according to an official report.
The government-controlled Petroleum Development Oman (PDO), which manages most of the Gulf country’s hydrocarbon sector, said domestic gas production is running at record levels but more supplies are needed to face a rapid growth in local consumption.
 The surge in local demand was a result of a steady expansion in the farming and other sectors, the construction of petrochemicals and other new industries, and the contracted demand by the clients of Oman ’s LNG plant, which is tied to long-term supply agreements stretching for 25 years.
The sharp rise in demand has triggered an exploration drive by PDO and foreign companies and this could boost the country’s gas demand by 40% to between 80-90 million cubic metres per day within the next five years.
“With its gas supply guaranteed, the LNG plant was commissioned in time to make its first shipment of LNG,which was taken on board the tanker Hanjin Sur on behalf of Korea Gas Corporation in April 2000. Since then, long-term LNG export deals have also been signed with customers in Japan , India and France ,” PDO said in its latest quarterly bulletin Al-Manhal.
“But demand for gas within Oman has also risen sharply since the turn of the century, most notably among the new industries that are developing around the port of Sohar ,and which provide important diversification to Oman ’s Economy….the new industries producing steel, aluminium and petrochemicals are very gas-hungry. So even though gas production is running at record levels – and PDO expects to deliver as much gas in the next five years as it has done in the previous 30 – the pressure is on.”
It said the surge in domestic demand had prompted Oman to turn abroad-- to import gas from Qatar through the Dolphin gasline that traverses the UAE and to invite foreign companies to explore for gas.
“This explains the newest development in Oman ’s gas industry, the opening of exploration and production opportunities to other companies. Until recently,PDO was solely responsible for exploring, developing, operating and supplying gas on behalf of the government,” it said.
It noted that parts of PDO ’s concession area have now been handed to British Gas and BP Amoco. In April 2006 it was announced that British Gas had won a concession agreement to explore for gas at Abu-Butabul,a 1,500 km area in the centre of Oman which is believed to hold gas that may need special technology to extract. BP,meanwhile,won a concession in late 2006 to develop gas accumulation in the Khazzan and Makarem fields, which cover 2,500 square miles within PDO ’s existing concession area.
“PDO itself is certainly not resting on its laurels in the face of this new competition. Indeed the company supports the government ’s actions and welcomes the chance to prove it can compete with any player when it comes to the upstream oil and gas business,” the report said.
“In the next five years PDO expects to bring a further 11 fields on stream, making a total of 17 fields in operation…These include very deep fields in the south of Oman that contain very sour gas – that is gas with high concentrations of Hydrogen Sulphide and Carbon Dioxide – in reservoirs subject to high temperatures and pressures. This poses major challenges, not least in terms of preserving the health and safety of the workforce while still optimising production.”
According to PDO, investment in processing capacity has also been maintained, with a new gas-processing plant brought on stream in Saih Nihayda in 2005. As well as serving Oman LNG ’s plant at Qalhat, gas from Saih Nihayda is also delivered to a second, more recently opened LNG plant, which is operated by Qalhat LNG. This gas is transported through a new 48-inch pipeline that was designed and laid by PDO.
A further big processing plant – designed to process 20 million cubic metres of condensate rich gas per day – is due to come on stream in PDO ’s Kauther gas field in early 2008. Once the Kauther plant is launched, natural gas will account for some 40% of all the hydrocarbon energy PDO supplies.
“On the downstream side, Oman Gas Company (OGC),which operates and maintains a gas supply network across the Sultanate, is also making major investments in its infrastructure. Around 500 km of new pipelines are being added to OGC ’s transportation network, which delivers natural gas to power generation plants, water desalination facilities, Sultan Qaboos University and several industrial estates,” it said.
“In all, Oman ’s gas output is expected to reach 80-90 million cubic metres per day in five years ’ time, some 40% more than present levels, turning a country that ’s a relatively small player in today ’s gas market into a more significant force, not to mention fuelling the continued expansion of diversified industries within Oman itself…But one thing is for sure: however high production levels eventually reach, the insatiable demand for gas in Oman and worldwide means none will ever go to waste.”
Highlighting the LNG project in Qalhat, Sur, the report said a budget of some $2 billion had been allocated for its early construction stages.
It said the plant remains one of the largest infrastructure investments in the history of Oman . Construction took 40 million man hours, with 100,000 cubic metres of concrete poured 1,270 km of pipes installed and 570 individual pieces of equipment having to be put in place.
“Supplying this giant plant with gas became the responsibility of PDO,when the company signed an agreement with the government to develop the gas fields it had discovered in central Oman in order to provide a guaranteed gas supply for 25 years,” it said.
“To fulfil its end of the agreement, PDO had to drill wells, hook them up to a new gas processing plant at Saih Rawl, and then transport the processed gas via a 352-kilometre pipeline to Qalhat.
“This upstream LNG project, costing $1.2 billion, is among the biggest and most complex projects in PDO's history. But despite the huge challenges involved the project was completed as planned and in November 1999 the Saih Rawl Central Processing Plant and the gas pipeline from Saih Rawl to Qalhat were commissioned. |
