Oman's oil and gas sector after Sultan Qaboos
Vinod Raghothamarao, director consulting for energy wide perspectives at IHS Markit, comments on the legacy of Sultan Qaboos, and the future for Oman’s oil and gas sector
Sultan Qaboos did have profound impact on the oil and gas sector by advocating series of reforms including envisioning Oman Strategy Vision and its impact on the oil and gas sector. Instrumental in the merger of upstream and downstream companies in Oman and also announcing US$ 20 bn of investment in downstream projects. Quick to adapt and restructure based on the changing market dynamics in the oil and gas sector with visionary reforms, Sultan Qaboos became known to his countrymen as “the renaissance”, investing billions of dollars of oil revenues in infrastructure
The sultanate is making efforts to sustain oil and gas production and increase hydrocarbons reserves. Oman’s estimated hydrocarbon reserves are considerably lower than most of its Gulf peers, so a persistent and well-structured oil and gas upstream exploration campaign is the only way it can continue surplus production and maintain energy sufficiency. Haitham is one of the sponsors of Oman’s Vision 2040 social and economic reform initiative, which aims to diversify Oman’s economy away from its dependence on oil and gas exports, and open the country up to private sector investment. Thus the change in leadership will not have any major impact on the current restructuring of Oman’s Oil and Gas Sector
Oman remains an attractive country for hydrocarbon exploration due to its political stability in comparison to the rest of region however significant changes to the national oil sector are expected in 2020. The Oman government is planning to merge nine state-owned upstream and downstream companies under a new entity named “OQ”. The companies which will be merged under the new company include Oman Oil Company S.A.O.C (OOC), Oman Oil Refineries & Petroleum Industries Company (Orpic), Oman Oil Company Exploration & Production (OOCEP), Oman Gas Company, Duqm Refinery & Petrochemical Industries (DRPIC), Salalah Methanol, Oman Trading International (OTI), OXEA and Salalah Liquefied Petroleum Gas. State-owned Oman Oil Company (OOC) is also planning to list 20% to 25% of its shares in an initial public offering by the end of 2020. OOC holds interests in 16 blocks/contracts in Oman and stakes in a number of midstream and downstream projects. Oman is planning to invest over USD 20 billion in downstream projects in the next five years.
The Oman Bid Round 2019, which included six onshore blocks (Block 58 (Qatbeet), Block 70 (Mafraq) and blocks 73, 74, 75 and 76) closed on 30 May 2019. No licences were awarded under the round in 2019 but awards are anticipated in 2020.For its offshore Block 52 (Juzor Al Hallaniyyat) licence, Eni Oman is planning to commence its much-anticipated offshore exploratory drilling campaign in February 2020. It has contracted the “Pacific Bora” drillship to drill the well.
The Sultanate’s main players Petroleum Development Oman LLC (PDO), Occidental Petroleum (Oxy), and OOCEP will again continue with their established activities throughout the coming year. Gas production is expected to increase again this year as a result of the Phase 2 (Ghazeer) development at BP plc’s tight gas field in Block 61 (Khazzan-Makarem). Oman’s liquids production remains relatively stable (approximately 970,000 b/d of liquids), declining oil production is being offset by steadily increasing condensate production and should continue at a similar level throughout 2020.