Oil & Gas market In Oman

Oman’s gas production levels are set to surpass oil by 2023 thanks to an impressive
surge in the development of gas fields in the sultanate, according to Rystad Energy.

“Gas is on the rise in Oman, and this transition is very timely. Oil output declines
over the last two years may indicate a point of no return for Omani oil, but the
country’s sliding oil production is set to be replaced by gas,” said Rystad Energy
Analyst Aditya Saraswat.

At peak production in 2016, Oman’s oil output reached 900,000 barrels per day
(bpd), declining to 870,000 bpd by 2018. Rystad Energy, an independent energy
research and consulting firm, estimates that by 2025 oil production will decrease by
an additional 200,000 bpd, as output from older fields continues to slump.

As new oilfield developments have failed to stabilise the country’s crude output,
Oman has shifted its focus to invest in gas developments. This will see gas
production escalate to approximately 130 mn cubic meters per day (MMcmd) by
2025, shifting Oman’s oil-gas production mix from about 35% gas in 2015 to over
50% in 2025.

Oman’s oil and gas sector has been allocated investments of between $10 billion and $15 billion
over the next three years, Emirates’ News agency (WAM) cited its oil and gas minister as saying.
These will be mostly concentrated in the petrochemical industries, in addition to the presence of
many investments for foreign companies in the energy sector.

INDUSTRY FACTS AND FIGURES:

 Oman is planning to invest about US$5.7 billion in 2019 in oil and gas
production and exploration activities, nearly 6 per cent higher than 2018.
 The hydrocarbon sector accounts for about US$12.2 billion or 74 per cent of
the total US$26.2 billion estimated overall revenue in 2019.
 Oman's real GDP growth is expected to grow by 2.7 per cent in 2019 up from
2.4 per cent in 2018. (Fitch Solutions Group)
 Oman's hydrocarbon production is set to rise considerably in 2019.
 Oman's crude production is seen to rise by 3.1 per cent in 2019, from 0.5 per
cent in 2018. Production will largely stem from investments in EOR maturing
fields.
 US$ 26 billion worth of mega oil field, petrochemical projects are seen to drive
the country's growth.

Domestic production-

Oil and gas remains crucial to Oman's economy. In 2017, Oman's hydrocarbons
sector accounted for about 72% of government revenues. This is projected to reduce
to about 70% in 2018. Oman is the largest oil and natural gas producer in the Middle
East outside the Organization of the Petroleum Exporting Countries (OPEC). Even
though it is not a member of OPEC, in 2016, Oman agreed to cut production by
45,000 barrels as part of the OPEC agreement reached in Vienna, Austria on 10
December 2016. Oman was also appointed to the high-level monitoring committee
set up by OPEC to oversee the implementation and compliance of the oil production
cuts.

Oman has an estimated 4.7 billion barrels of proved oil reserves and 25 trillion cubic
feet of proved natural gas reserves, this remains as of 2018 the most up to date and
verifiable data. Daily average production of crude oil and condensate averaged
927,000 barrels per day (b/d) in 2017, down from just over 1 million b/d in 2016. The
decline was in line with Oman's commitment to a joint OPEC/non-OPEC pact of
December 2016. Oman aims to produce an average of 120 million cubic metres per
day of gas over the five years between 2014 and 2018. In 2015 it produced 39 billion
cubic metres of gas for the year, which amounts to around 108 million cubic metres
of gas per day.

Oil imports/exports market-

Oman exports most of its crude oil to Asia. China remained the biggest importer of
Omani crude oil, lifting 77% of total exports, followed by India with a 10% share.
Japan (4%) and South Korea (3%) were notable importers too. Oman is not a major
exporter of refined petroleum products (despite the expanded production of plastics
from Sohar, and the planned greenfield refinery at Duqm (see below, Domestic
market structure and Government policy objectives)). Oman does not import any
crude oil, although it imports some refined petroleum products for use in the
domestic market. Oman does not have any international oil pipelines and exports are
shipped out of the country. Mina Al Fahal has been the main export terminal since
the 1970s. Musandam Gas Plant Terminal began crude oil export operations in
2016. The Ras Markaz crude oil storage terminal is planned to be the third export
terminal for crude oil in Oman.

Domestic market structure-

State-owned companies produce the majority of Oman's oil and gas, although
private sector participation is increasingly encouraged by the government.

There are the following state companies:

• Petroleum Development Oman (PDO) is the major operator in Oman, producing the
majority of the country's crude oil. It is 60% owned by the government and 40%
owned by a consortium of international oil companies: Shell (34%), Total (4%) and
Partex (2%). PDO also accounts for nearly all of Oman's natural gas supply.

• Oman Oil Refineries and Petroleum Industries Company (ORPIC) controls Oman's
refining sector. It owns both of Oman's operating refineries at Mina Al Fahal (in
Muscat) and Sohar.

• Oman Gas Company is responsible for the country's natural gas transmission and
distribution systems.
• Oman LNG operates Oman's three liquefaction trains near Sur. It is owned by a
consortium composed of the government (51%), Shell (30%), Total (5.54%) and
other investors.

• Oman Oil Company is responsible for pursuing investments in the energy sector
both inside and outside of Oman. It has invested in a wide range of projects,
including upstream oil and gas developments and power plants

International oil companies-

 International oil companies play a major role in the petroleum industry in Oman,
Occidental Petroleum (Oxy) being the second largest oil producer in Oman. Other
major players with oil and gas interests in Oman include BP, Shell, Total, Partex,
Lebanese independent Consolidated Contractors Energy Development (CCED),
Sweden’s Tethys Oil, Mitsui, and Daleel Petroleum, a 50/50 joint venture between
Omani private firm Petrogas and Chinese state firm China National Petroleum
Corporation (CNPC). The government is also encouraging Omani oil companies to
invest in upstream concessions.

Petroleum and other liquid fuels :

Oman’s petroleum and other liquids production exceeded 1 million barrels per
day in June 2015 for the first time since December 2000.

Sector Organization-

The Ministry of Oil and Gas coordinates the government's role in the Omani
hydrocarbon sectors. Final approval on policy and investment; however, rests with
the Sultan of Oman. Petroleum Development Oman (PDO) holds most of Oman's oil
reserves and is responsible for more than 70% of its crude oil production, according
to PDO.3 In addition to the government's 60% ownership stake in PDO, Shell (34%),
Total (4%), and Portugal's Partex (2%) also own stakes in PDO.4 The Oman Oil
Company (OOC) is responsible for energy investments both inside and outside
Oman and is fully owned by the government. The Oman Oil Refineries and
Petroleum Industries Company (ORPIC) controls the country’s refining sector and
owns both of Oman’s operating refineries.

Reserves-

According to the Oil & Gas Journal, Oman had 5.3 billion barrels of estimated proved
oil reserves as of January 2016, ranking Oman as the 7th largest proved oil reserve
holder in the Middle East and the 22nd largest in the world.5 A report published by
the U.S. Geological Survey in 2012 stated that the estimated mean undiscovered
energy resources in the South Oman Salt Basin—located in the southern part of the
country—totaled more than 370 million barrels of oil, 315 billion cubic feet (Bcf) of
natural gas, and more than 40 million barrels of natural gas liquids (NGL).6 With
rising production levels, a growing petrochemical sector—which relies on liquefied
petroleum gases (LPG) and NGL—and additional potential resources, the country is
unlikely to significantly alter its dependence on hydrocarbons in the short term.
Exploration and production-

Enhanced oil recovery techniques helped Oman’s oil production rebound from a
multi-year decline in the early 2000s.
Occidental Petroleum has the largest presence of any foreign firm in Oman. Other
major players with interests in Oman include Shell, Total, Partex, BP, CNPC, KoGas,
and Repsol.7 By the end of 2013, there were exploration and production activities in
all 31 of Oman’s exploration blocks, according to the Ministry of Oil and Gas.

Oman’s petroleum and other liquids (total oil) production ranks 7th in the Middle East
and ranks among the top 25 oil producers in the world. Oman is the largest oil
producer in the Middle East that is not a member of the Organization of the
Petroleum Exporting Countries (OPEC). Oman’s annual petroleum and other liquids
production peaked at 972,000 barrels per day (b/d) in 2000, but dropped to 715,000
b/d by 2007. Oman successfully reversed that decline, and total oil production rose
each year, averaging 1,002,000 b/d in 2015 (Figure 3). Enhanced Oil Recovery
(EOR) techniques helped drive this production turnaround, although the country also
experienced some additional production gains as a result of new discoveries.
Oman’s government aims to keep production near its current level for at least the
next five years by continuing to apply EOR techniques and the cost management
associated with it.9 Several recent developments could contribute to future oil
production growth in Oman. Some of the notable new developments include Circle
Oil’s announcement of Block 52 (offshore) with its 7 billion barrels of oil in place and
Occidental Petroleum’s Block 53, located at the Mukhaizna field, which could
produce roughly 44 million of barrels of oil each year. 10 Occidental Petroleum
implemented one of the world’s largest steam flood projects in Oman in 2005.

Enhanced Oil Recovery (EOR) -

Oman’s ability to increase its oil and natural gas production relies heavily on
extraction technologies. Several EOR techniques are already used in Oman,
including polymer, miscible, and steam injection 0 200 400 600 800 1,000 1,200
Figure 3: Oman petroleum and other liquids production, consumption, and net
exports, 1996-2015 thousand barrels per day Source: U.S. Energy Information
Administration production consumption net exports 5 techniques.11 Because of the
relatively high cost of production in the country, Oman’s government offers
incentives to international oil companies (IOCs) for exploration and development
activities in the country’s difficult-to-recover hydrocarbons. The government enlists
foreign companies in new exploration and production projects, offering generous
terms for developing fields that require the sophisticated technology and expertise of
the private sector. Given the technical difficulties involved in oil production, the
contract terms for IOCs have become more favorable in Oman than in other
countries in the region, some allowing significant equity stakes in certain projects.12
To increase oil production, EOR techniques, such as steam injection and miscible
injection, have been the key driver of Oman’s oil production growth. Block 6,
operated by PDO, is the center of current EOR operations, with the Marmul field
(polymer), Harweel field (miscible), Qarn Alam field (steam), and Amal-West (solar),
using all four of the EOR techniques within the same block.13 Solar EOR at Alam-
West in southern Oman is the first solar EOR project in the Middle East, completed
by GlassPoint Solar in 2012 and commissioned in early 2013In 2014, GlassPoint
received a $53 million equity investment led by Oman's largest sovereign wealth
fund, the State General Reserve Fund, along with the venture arm of Royal Dutch
Shell and its original syndicate of venture firms: RockPort Capital, Nth Power and
Chrysalix Energy Venture Capital. GlassPoint Solar’s project involves the production
of emissions-free steam that feeds directly into the thermal EOR operations currently
in existence. This process reduces the need to use natural gas in EOR projects. 14
In partnership with PDO, GlassPoint is currently building Miraah, which will be one of
the largest solar plants in history, producing 1,021 megawatts of peak thermal
energy. Miraah is more than 100 times larger than the pilot project and once
complete, will generate 6,000 tons of solar steam each day.

Exploration and Production-

Oman’s potential for natural gas production growth may be substantial,

supported by promising developments in several new projects.

Oman held 24.3 trillion cubic feet (Tcf) of proved natural gas reserves as of January
2016, according to the Oil & Gas Journal. 24 Oman’s gross natural gas production
grew to more than 1.13 Tcf in 2013, but it dropped slightly to 1.09 Tcf in 2014. Nearly
81% of the country’s gross natural gas production in 2014 came from nonassociated
natural gas fields, according to government figures. 25 Oman’s natural gas sector
grew in importance over the past two decades, largely the result of the opening of
the country’s two LNG facilities in 2000 and 2005. 26 The opening of the Oman LNG
facility in 2000 helped spur Oman’s dry natural gas production, which grew from 322
Bcf in 2000 to 1,091 Bcf in 2014. The greatest growth potential for Oman’s natural
gas production is in the Khazzan-Makarem field in BP’s Block 61. The field is a tight
gas formation, and BP suggests the field has between 15 Tcf and 20 Tcf of
recoverable natural gas resources, and up to 100 Tcf of natural gas in place.27 In
November 2014, Oman brought on stream the Abu Tabul gas field in Block 60, as
well as a number of other projects to help meet short-term demand in the country.
Abu Tabul is targeting production of 90 million cubic feet of natural gas per day and
6,000 b/d of condensates.

List of Oil & Gas Events 2020 in Oman:

9th – 11th march 2020

Oman Petroleum & Energy Show (OPES) – Muscat, Oman

24th – 26th Feb 2020

16th International Gas Union Research Conference – Muscat, Oman

22nd – 25th Mar 2020

OGWA Oman Oil & Gas Exhibition and Conference – Muscat, Oman

1st – 3rd Sep 2020

World Heavy Oil Exhibition & Congress – Muscat, Oman
15th – 16th Mar 2020
Ogwa - Oil & Gas West Asia 2020 – Muscat, Oman

29th – 1st April 2020

15th Annual Asset Integrity and Process Safety Management Summit – Muscat,
Oman