As the oil prices have slumped, the world is curious to know the future of all the oil economies. Oman’s oil and gas market is experiencing major changes in terms of new project development, consumption patterns and market scenarios amidst rapidly shifting global dynamics. Factors such as declining US shale production, Iran’s sanction lift, Saudi Arabia’s plans to expand market share, LNG planned projects, and lower than anticipated Chinese demand are all expected to significantly impact the refiners, LNG and storage operators, upstream and downstream companies.
Oil & Gas West Asia, one of the region’s leading oil and gas events, highlights six reasons why Oman’s oil and gas industry is set to flourish:
Exploration and production
Omani oil production reached 992 700 bpd in June 2015. The country’s target is 980 000 bpd for the year. The government is expanding its push to step up the use of enhanced oil recovery techniques in its maturing assets and heavy oilfields, an approach that has turned around a decline in output over the past decade. Developments such as the Khazzan tight gas project and Amal West’s heavy oil extraction are expected to boost production in coming years.
Development of SLCCs and LCCs
Oman’s fifth super local community contractor was registered in June 2015. The initiative, led by Petroleum Development Oman and the Ministry of Oil and Gas, is steadily directing greater amounts of hydrocarbons wealth to communities living in concession areas. Some companies have welcomed the programme, while others believe it dampens competition.
Engineering and construction
Engineering and construction companies in Oman are preparing to operate with lower profit margins as the price of oil remains in a slump. In the first quarter of 2015, the country saw a decrease of 43.3% in contract awards. However, project spending will continue, undergirded by the sultanate’s robust sovereign wealth fund. In this climate, local companies are continuing a struggle to claim a larger share of the sector’s projects.
The Omani government spent US$11.5 billion on drilling projects in 2014 in its continuing efforts to keep oil and gas production on a steady rise. This spending has been paralleled by an expansion in the industry’s enhanced oil recovery projects, and these two trends mean a constant stream of work both for local and international oilfield services companies that will continue for many years.
Downstream and power generation
The drop in oil prices has prompted the Omani government to push to expand the country’s downstream and petrochemicals sectors in order to add value to its hydrocarbons products. Investments such as the US$3.6 billion Liwa Plastics Project are being made in tandem with support to raise feedstock production from gasfields such as Khazzan and Makarem.
Marine and logistics
Oman’s location, paired with recent developments in local and regional infrastructure, has positioned the country as a potential logistics centre and gateway for trade between the Middle East, North Africa and Asia. The government is investing in expanding its railway network as well as the ports at Salalah, Duqm and Sohar, which is located on the Strait of Hormuz. The country is also developing industrial zones alongside these ports in a bid to secure this role.
Oil & Gas West Asia is scheduled to take place from 21 - 23 March 2016 at the Oman International Exhibition Center in Muscat.
Adapted from press release by Rosalie Starling
Read the article online at: https://www.hydrocarbonengineering.com/refining/01022016/omani-oil-and-gas-industry-to-flourish-2318/