Gas demand to increase by 50% over 6 years as Oman’s industrial base expands
Domestic gas requirements are set to expand rapidly over the next few years as Oman’s industrial base expands and as the utilities sector grows to keep pace with rising demand for water and electricity. Officials, however, expect the increase in gas production to be managed to ensure supplies are guaranteed over the long term.
The Oman Power and Water Procurement Co (OPWP) estimates gas consumption in the electricity and water desalination sector will rise from the current annual volume of 6.7bn m3 to 10bn m3 by 2020, an almost 50 per cent increase. While the national demand for gas will rise sharply over the coming six years, the rate of increase is by no means evenly distributed, with requirements set to spike in some regions.
This is particularly the case in areas of the country where the government has promoted industrialisation as a means to broaden the economic base and provide new opportunities. Demand for gas in the Salalah region, the centre of extensive industrial development, is forecast by the OPWP to rise from the current 0.72bn m3 annually to 1.2bn by 2020 as new industrial facilities, as well as the power plants and utilities needed to support them and the swelling population, come on-line.
To help meet this demand from the utilities sector, along with that of industry and private consumers, Oman is pushing to raise production, with output to be increased steadily over the next few years. Production from domestic fields, which topped 100mn m3 a day in 2013, should reach 120mn m3 a day by 2018, according to the Ministry of Oil and Gas.
The biggest boost to output, one that could push production past the daily figure of 120mn m3, will be the new Khazzan-Makarem tight gas development. A project of energy major BP and the Oman Oil Company Exploration and Production, the Khazzan project is based in an area known as Block 61 in central Oman. By sinking some 300 wells to depths of up to 4,500m and utilising hydraulic fracturing technology and other techniques, BP plans to produce 28.3mn m3 of gas a day.
While Oman will have far greater access to gas supplies in the coming years, the government intends to manage upstream flow to downstream industries, balancing long-term supplies with measured industrial expansion. According to H E Salim al Aufi, Undersecretary of the Ministry of Oil and Gas, the first priority for the increased flow of gas will be utilities, ensuring the supply of electricity and water (through desalination), with commitments to existing industries being met after that.
One of the industry players already set to benefit from rising gas production is Sohar-based Jindal Shadeed Iron and Steel with its recently expanded production facility set to take annual output of steel products to around 2mn tonnes, most of which will be destined for the growing domestic market.
While Oman is set to increase domestic gas production, and is holding talks with Iran over the possibility of imports via a direct pipeline, industry will have to compete with other calls on gas supplies. Those industries that can offer the best value-added components, including employment, revenue, export potential and meeting domestic needs, will likely have the inside running when pitching future proposals to the government and state agencies.
- Underestimation or outright denial? Shale ‘euphoria’ deemed ‘pointless’ by some in the Gulf
- The 'oil curse' just became more real: how oil smuggling in financing the ISIS’ operations
- Why will Middle Eastern oil prices go up?
- Yemen and lifting energy subsidies: the great struggle
- Playing things safe: is China diversifying away from GCC oil imports?