$8.7bn spent on oil sector in Sultanate

By: Vinod Nair

MUSCAT: Oman’s policy is to maintain oil production at 950,000 barrels a day and the long-term challenges include finding new exploration areas and introducing new technologies, said Salim bin Nasser al Oufi, Under-Secretary at the Ministry of Oil and Gas.

Al Oufi said that the government’s spending on the sector stood at $8.7 billion last year while spending on natural gas production was $2.8 billion. In a presentation during a special media briefing, he said that four fatalities were reported in the sector in 2014, compared to six in 2013. “Our aim is to bring it down to zero,” he said. The Lost Time Incident was 81, compared to 61 in 2013.

It was also said that due to falling oil prices, companies will focus on main projects and no employees will be removed as part of cost cutting measures. “Firms have their own methods to spend and we do not interfere in their operations. Training programmes still continue, maybe there is a cut in overseas workshops or seminars,” he said.

He said the oil and gas reserves in 2014 saw the addition of 393 million barrels of oil and condensates and 1.9 trillion cubic feet of gas due to new discoveries. At the end of 2014, the total reserves stood at 5,306 million barrels of oil and condensates and 24.3 trillion cubic feet of gas. He pointed out that in terms of production, daily oil production in 2014 stood at 943,000 barrels of crude oil and condensates, an increase of 0.2 per cent from 2013.

The average gas production was 97.8 million cubic meters per day (of which 79.2 million cubic meters were of non-associated gas and 18.6 million cubic meters of associated gas); 3.8 per cent less than 2013.

He added that the combined output from Mina Al Fahal and Sohar refineries was 81 million barrels (of which 46 million barrels were produced from Sohar refinery and 35 million barrels from Mina Al Fahal refinery including residues).

“The government exerts continuous efforts to encourage the local and foreign companies of the private sector to invest in the oil and gas sector and all oil related projects including drilling, exploration, production, and refining, as well as developing gas dependent projects and related services,” he said.

“The total expenditure on oil and gas exploration and production for 2014 was around $11.5 billion divided into 68.9 per cent as capital investments, such as drilling and facilities, and 31.1 per cent as operational expenditure.”

He added that the Omanisation level for upstream and downstream operators was around 12,000 Omanis in 2014; an increase of 15.6 per cent than 2013. Al Oufi said that in 2014, the ministry signed an agreement with MEDCO Arabia (Concession Area 56), and local and international oil and gas companies were invited to submit their tenders to obtain exploration licenses in five open concession areas onshore and offshore. It is our hope to sign some of these agreements during this year.

As for the challenges facing oil and gas sector, oil exploration and production operations as they need sophisticated technology especially the Sultanate strives to maintain its production at 950,000 bpd with plans to increase production to 980,000 in 2015.

Mus’ab bin Abdullah al Mahrouqi, CEO, Orpic, said the total capacity of Sohar and Al Fahal Port refineries is about 185,000 barrels per day, which constitute 20 per cent of the daily production of oil and condensates in the Sultanate. He added that the two refineries have refined about 59 million barrels per year in 2014 compared to 55 million barrels in 2013.

He said that the company’s projects will return direct commercial benefits on various business sectors in the Sultanate and will on the other hand secure 300 direct and permanent jobs in these projects, in addition to temporary 2,400 jobs for Omanis during the period of implementation of the projects.

He added that these projects will contribute in providing 900 indirect jobs in the region through business that will arise as a result of the establishment of the Liwa Complex for Plastic Industries and the improvement project of Sohar Refinery, which will be a great value to the local economy.

He pointed out that the company is currently investing more than $6.5 billion in the implementation of three major projects that will have a significant impact on the development of manufacturing plastic industries in the country and increase the added value that can be derived from Omani crude oil and natural gas as well.

He explained that the three major projects will lead the transition in the company and will be completed by 2018.

He said Sohar Refinery will increase the production of fuels, naphtha and propylene by 70 per cent. He added that this increase will contribute to meet the increasing growth in the consumption of fuel in the country, which has grown at a rate of 10 per cent annually in the last five years, saying that at the same time, the needs of aromatics and propylene factories for raw materials will be met, and will decrease the rate of purchase of naphtha from 75 per cent to 25 per cent, noting that the Muscat-Sohar pipeline will be operated in 2016, which will contribute to linking the MAF Refinery with Sohar refinery by 280-km pipeline.

He explained that the expansion projects of the company will contribute to the triple growth of the company’s assets to reach by the end of 2018 to about $10 billion as the company’s plan includes investments in previously mentioned projects at a total value of $7 billion, about 70 per cent of which are funded by local and international banks and financial institutions. He noted that these projects will contribute to increasing the capacity of refineries to reach 250,000 barrels per day, and natural gas liquids will be extracted for the first time and used in plastics production and Liwa complex for plastic industries.

Salim bin Zahir al Siyabni, CEO of Oman Oil Company Exploration and Production, reviewed in his presentation the company’s plan and said that the average daily production of the company in 2014 amounted to 32,000 barrels as commercial production of gas and condensates began last December. He said that the laying of pipelines is completed that linking the platform in the concession area 8 with gas station in Musandam. The gas export line to the gas network in the UAE was also completed and that more than 99 per cent of the construction of oil and gas treatment plant activities was completed as well.

SOURCE: OMAN DAILY OBSEVER

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