Oman makes intensive efforts to expand oil and gas sector

Nov 12, 2001 01:00 AM

Intensive efforts were made in the year 2000 to expand the Oman oil and gas sectors. Particular attention was given to boosting oil and gas reserves, either through new discoveries or by re-evaluating reserves or improving extraction methods where exploration is concerned.
The Oil and Gas Ministry gives priority to open onshore and offshore areas, and encourages multinational concession-holders to invest in them. Steps are also being taken to improve the added value of oil and gas in co/peration with other relevant bodies, the aim here being to implement a number of development projects linked to the oil and gas sectors.
The government has signed several agreements with private sector investors for the sale of gas to gas-based industrial projects which will be implemented by the private sector. Work is also underway to complete designs and final studies for implementation of Sohar refinery project and improve products of Omani oil Refinery Company.

To provide the necessary infrastructureto achieve these objectives, efforts are being made to expand and upgrade the efficiency of government gas network utilities. That will involve expanding gas-processing facilities in Seih Rol and Nahida.
The Omani Gas Company has also undertaken construction of two pipelines to transport gas Salalah and Sohar. The pipeline projects will impact positively on all economic activities in Sohar and Salalah by providing an energy source for gas-based industries and allowing for the establishment of electricity generating plants.
The new industrial activities will diversify the sources of national income, provide additional work opportunities and increase exports. To develop the institutional framework of the oil and gas sector, the Omani Gas Company was established. That will help to expand activities in the gas sector in the future. Amendments were also made in the structure of the Ministry of Oil and Gas to help improve the supervisory, organising, technical and administrative skills of the ministry's employees.

Despite the considerable development in various economic activities in the Sultanate during the 30 years since the inception of the blessed renaissance, the oil sector continued to play the role of the basic engine of the Omani economy. The government encourages international oil companies to invest in oil and gas exploration and production onshore and offshore in accordance with economic vision 2020 and the Fifth Five-Year plan on order to increase the Sultanates oil and gas reserves.
In this context, 13 agreements covering 14 blocks were signed in the last few years. In 1999, three new concession agreements were signed with Shell Deepwater (Offshore Block No. 18), Philips Petroleum Mudai (onshore Block No. 38) and Novus Australia Energy (Offshore Block No. 17).
Some companies abandoned some blocks for lack of encouraging results. Occidental Petroleum pulled out from block No. 31, Amoco-Oman from Block 15 and Block 44. The agreements were concluded on the basis of relative production sharing. Exploration activity continued in the years 1999 and 2000.
A total of 165 new wells were dug in 1999, including 125 oil development wells, 14 gas development wells, 23 oil exploratory wells and 3 gas exploratory wells. In 2000, a total of 224 new wells were added. These included 194 oil development wells, 8 gas development wells, 18 oil exploratory wells and 4 gas exploratory wells.
There were 111 productive fields in 1999 and 113 productive fields in 2000 The new exploration and reappraisal operations produced positive results. New quantities of oil and gas were added to the existing reserves.

Petroleum Development Oman (PDO) succeeded to boost reserves in 1999 by adding 440.1 mm barrels of crude and oil condensates. Of this quantity, 66.8 mm barrels were added by way of exploration and 373.3 mm barrels by way of reappraisal and extraction upgrading.
In the year 2000, the company added 449 mm barrels to the Sultanates preserve. 89 mm barrels were added from the new discoveries and 36 mm barrels as a result of reserves reappraisal of productive fields. The rate of reserve increase by way of new additions in 2002 stood at 33.5 % compared to the figures in 1999. Additions by way of reappraisal declined in 2000 by 3.6 % compared with 1999. However, the total increase in the company's reserves went up by 2.1 % in 2000 over the year.
Additions to the reserves made by other companies (Occidental) in the year in 2000 stood at 3.9 mm barrels. The total of the remaining oil reserves of all companies amounted to 5848 mm barrels in 2000; up 1.8 % over the year.
Oil production increased in 2000 on average by 50,000 bpd or 19 mm barrels annually. That meant a 5.5 % production increase. Average production stood at 945.9 mm bpd in 2000 as against 904.8 mm bpd in the year before. Omani oil prices are subject to by fluctuations in the world oil markets. Oil prices in 1999 and 2000 were affected by number of factors including the climatic conditions in the oil consuming countries which led to an increase in oil demand.

The economic recovery in some Asian countries following the recession and crises there in 1998 also led to a rise in demand. Oil prices were also affected by the collective decisions made by the OPEC member states to safeguard producers interests by reducing output to curb price deterioration in 1998.
The OPEC intervention to either increase or reduce production in 1999 and 2000 were effective in raising price levels. Also, OPEC resolutions to control production levels and its numerous attempts to balance supply and demand to secure a price that will be acceptable to both producers and consumers had produced a positive impact in terms of securing prices acceptable to the producers.
However, that outcome was considered unsuitable for consumers because of the sharp increases in oil prices resulting from the taxation policies adopted by the consuming countries. The sultanate's oil exports in 2000 rose to 327 mm barrels, as against 309 barrels in 1999, up by 5.8 mm. Exports fromPDO output constituted 97.2 % of the Sultanates total crude exports in 2000 as against 95.7 % a year ago.

The main importing country of Omani oil in 1999 was Japan (39.4 %) followed by Thailand (21.2 %) and Korea (18.1 %). In the year 2000, China took the first position as the major receiver of the Sultanates oil exports (35.1 %), followed by Japan (22.4 %), and Korea (17 %). The ministry endeavours to conclude long term agreements for oil exports with some cou.tries.

Source: Asia Pulse
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