Oman has surplus crude

Mar 03, 2014 12:00 AM

By Lakshmi Kothaneth

Expenditure on oil exploration currently stands at $10 billion

The oil  industry is healthy, the production is increasing, the reserves are good and the most exciting news to share is that in the past five years we have managed to book more reserves than what we have been producing, said Dr Mohammed bin Hamad al Rumhy, Minister of Oil and Gas.

In simple language “we have had surplus of crude oil. In the account we deposit more than we spend and that is very exciting in the industry when the reserve replacement ratio exceeds 1. We have managed in the last five years to maintain 1.2; which means we are putting more into our account of crude oil about 20 per cent more than what we spend,” he said.

There are challenges however, as the cost becomes a major concern. “Our industry is becoming extremely expensive. The difficult oil is becoming more and more. We often use the phrase — easy oil has been already produced. Now what we are seeing from our oil fields is more difficult oil to extract. This translates to more expensive oil to produce, but more oil,” explained the minister.

While answering a query from the journalists during the media briefing on the changes excepted in the blend, the minister said the blend will change. “We are making new discoveries, some of it heavy as in the case of Kahazzan. Lighter or heavier when it comes to blend, time will tell. We want to have the flexibility of qualities,” he said.

In terms of gas, the minister said in theory we have to consume what we produce. Oman LNG can do more and so can PDO with their heavy oil that they want to pump with steam but we are restricting them because we have to consume as you cannot store gas. We can produce more once BP’s Khazzan begins PDO’s discoveries that are in the pipeline begin to produce.

Talks are going on with Iran about gas. “Whether we will achieve an agreement in the first quarter needs to be seen. Technical issues are being tackled right now such as the route, size, compression, quality and where we are sourcing the gas within the network in Iran. We are looking at export option, however the gas from Iran will be expensive, explained the minister.

The oil and gas industry in Oman presented an overall view on the development plans and achievements of the industry. Salim bin Nasser al Oufi, Under-Secretary of the Ministry of Oil and Gas, said there has been an increase in average output. The expenditure on exploration has been $10 billion, 72 per cent in capital investment and 28 per cent in operating expenditure.

The ministry and BP Oman signed in December 2013 a gas sale agreement and a production sharing agreement for the development of the Khazzan field. BP’s General Manager Dave Campell said in his presentation that the development plan will see approximately 300 mostly horizontal wells, eight rigs with 1 bcf/day and 1/3rd of Oman’s gas.

The challenges in developing tight gas in Oman are being tackled with subsurface data gathering during appraisal, use of extensive hydraulic fracturing studies along with implementation of technology programmes.

Raoul Restucci, Managing Director of Petroleum Development Oman, stressed on maximising recovery from existing assets and addressed the issues on realising the potential of Khulud. He also highlighted on the Mabrouk Deep Development and replacing new production with new reserves.

Robert Swain, VP for Mukhaizna Operation, Occidental Oman, said 20 oil and gas reservoir discoveries took place during the last three years.


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