Gas Remains at the Heart of Oman's Economic Diversification Plans for 2021 and Onwards

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Aug 06, 2021, 06:30 ET

DUBLIN, Aug. 6, 2021 /PRNewswire/ -- The "Will Gas Be the Game-Changer for Oman's Transition to a Brand New Era?" report has been added to ResearchAndMarkets.com's offering.

This report examines the risks and opportunities linked to Oman's gas, LNG and wider energy fundamentals, be it in terms of supply and demand, policy, upstream & LNG strategy and interplay with other fuels. It looks at the dynamics between macroeconomic fundamentals and trends (taking into account recent COVID impact), the role of gas in Oman's energy mix, including in the power and industrial sectors; the impact of upstream developments and the changes in its LNG portfolio.

The Sultanate of Oman has been going through a remarkable renewal of its gas and LNG industry since the late 2010s. Its gas revival since the start-up of the Khazzan tight gas and condensate field in late 2017, combined with renewed exploration momentum on the upstream front, has opened up new opportunities for its domestic gas market and its role as one of the longest-established LNG exporters in the Gulf region and in the world.

The nation has come a long way. Increased domestic production, combined with improved gas demand management especially in its power sector, has allowed the country to reverse its supply and demand balance at home and revive its LNG business, while a few years ago, Oman had contemplated mothballing some its existing liquefaction capacity.

Today, gas remains at the heart of Oman's strategy to fuel grand plans for economic diversification away from high reliance on oil income, in the prospect of dwindling oil reserves and amid high cost of enhanced oil recovery technologies at ageing fields. The stakes are far-reaching as new downstream and industrial investments are designed to boost in-country value, reduce one of the highest unemployment rates in the Gulf and address deeply entrenched socio-economic vulnerabilities displayed by dramatic protests during the 2011 Arab Spring.

But rapid changes on global oil and gas markets since the coronavirus pandemic, combined with budgetary constraints caused by lower oil prices, mean Oman is having to prove more agile in shaping a gas policy that fits in and supports ongoing efforts to address economic, political and even geopolitical challenges.

This report examines the risks and opportunities linked to its gas and wider energy fundamentals, be it in terms of supply and demand, policy, upstream & LNG strategy and interplay with other fuels.

In the context of the growing energy transition agenda, Oman has also been pushing to boost its renewables energy capacity and is already positioning itself to become a hydrogen producer and exporter.

This coincides with the upcoming expiry of some of its oil-indexed long-term supply LNG contracts which marks the end of an era for Oman as an LNG exporter. Most importantly, this calls for increased commercial flexibility to sustain LNG export revenues considering the cost of developing non-associated gas reserves and limited gas price incentives on the domestic market. In this regard, Oman has yet to create fresh policy signals at home in order to boost gas investments that shape a solid gas value chain and allow authorities to make the most of a window of opportunity for the fuel in a fast-changing energy landscape. This should support the transition to a cleaner energy mix, whilst fostering the development of new revenue streams at home for the interest of Oman's sustainable economic, political and social development for the longer term.

Key Topics Covered:

1 Introduction:
1.1 Overview

A strategic geography
History
A new era
Sultan Qaboos legacy
Arab Spring and social instability risk
Foreign policy
Geopolitical versus economic risks
Domestic changes

1.2 Economic indicators

Economic structure
GDP structure
Income dominated by hydrocarbon
Deficit
Debt rates
Borrowing strategy
Downgraded
Asset sale

1.3 Economic reforms, a slow process

Maintaining political and social stability
Spending
Subsidies
Tax reforms
VAT and Excise tax
Income tax
Diversification/Tanfeedh

2. What is driving gas demand in Oman?
2.1 Gas dominance in primary energy mix

Sectorial demand

2.2 Power sector

Historical trends
Cost-Reflective Tariffs
Subsidy Reforms
Power generation
Reducing gas dominance
Gas demand forecast for power generation
Future capacity
Renewables
Hydrogen
Coal
Spot electricity trading

2.3 Industries

Ports' developments
Duqm
Sohar
Salalah
Cement projects
Fertilisers and aluminium

3. Gas supplies: from pipeline imports to domestic resources
3.1 Reserves

Geology

3.2 Production

Gross production
EOR
Oil gas ratio
Marketed production
Gas
Condensates
Reduced concentration of players

3.3 Growing gas reserves

Khazzan growth
Phase 1: challenges and costs
Phase 2: capitalising on initial phase
Other projects
Additional discoveries
LNG bunkering, but no GTL
Further exploration efforts
Tenders
Bilateral deals
Push for unconventionals

3.4 Pipeline imports

Qatari Gas
Iran pipeline

4 What is the role of LNG?

4.1 Competing with domestic demand

Record exports
Stagnating volumes

4.2 LNG Marketing

Long-term contracts
Capacity expansion
New train in 2006
Debottlenecking
Pricing

4.3 Changing Strategy

Contracts' expiry
Widening the pool of buyers
LNG Bunkering

5 Conclusions

Companies Mentioned

BP
CEDIGAZ
Center for Statistics and Information (NCSI)
Dolphin Energy
Energy Development Oman (EDO)
Eni
Gas Natural Fenosa
Glasspoint
Itochu Corp
KOGAS
Kuwait Petroleum International (KPI)
Mitsubishi Corp.
Occidental Petroleum
Oman Cement Company
Oman LNG
Oman Oil Company
Oman Oil Company Exploration & Production (OOCEP)
Oman Power and Water Procurement Company (OPWP)
OQ
OQ Gas Networks
ORPIC
Osaka Gas
Osaka Gas National
Partex
Petroleum Development Oman (PDO)
Petronas
PTTEP. EOG
Qalhat LNG
Shell
Sohar Cement and Oman's Raysut Company
TANFEEDH
Thethys Oil
Total

For more information about this report visit https://www.researchandmarkets.com/r/r0s1jd

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SOURCE Research and Markets