Game-changer: Fit-for-purpose regulations to cover all aspects of upstream hydrocarbon activities in Oman
Conrad Prabhu –
Muscat, APRIL 11 –
Oman’s Ministry of Oil & Gas is preparing to roll out high-level regulations governing all governing all facets of upstream hydrocarbon activities in the Sultanate.
The move, according to a top official of the Ministry, will support the development of a well-regulated upstream oil and gas sector in Oman — an outcome that significantly enhance the Sultanate’s investment appeal for international exploration & production (E&P) companies.
The new ‘Oman Oil & Gas Regulations’ represent an across-the-board effort to bring international standards and best practice to our industry,” said Salim bin Nasser al Aufi, Under-Secretary of the Ministry of Oil & Gas.
“It provides greater specificity to the existing Oil & Gas Law and the Exploration & Production Sharing Agreement (EPSA), while eliminating any room for ambiguity that comes in the way of the safe and efficient management of the nation’s hydrocarbon resources.”
Speaking exclusively to OPAL Oil & Gas, a quarterly news magazine published in collaboration with Oman Daily Observer, Al Aufi said the new regulations, currently being fine-tuned ahead of their unveiling later this year, will be a game-changer for the industry.
Besides strengthening the existing regulatory framework for the effective management of hydrocarbon investments in the Sultanate, it will also contribute to the goal of boosting efficiency, safety and operational security in all areas of the industry’s upstream business. Additionally, the new regulations will address long-standing deficiencies in the Oil & Gas Law and EPSA guidelines, he said.
“For example, there are presently no regulations on well data acquisition, on the methodology for abandoning wells and facilities, on flaring of associated gas, and so on. These gaps have been suitably addressed,” Al Aufi said.
As is expected of a high-level, fit-for-purpose regulatory framework, the new Oman Oil & Gas regulations will be broad-based in their scope. Coverage will include the following areas: HSSE Management, Well & Drilling Operations Management, Reserves Management, Resource Maturation & Management, Surface Infrastructure Management, Financial Requirements, Contracting & Procurement Requirements, Data Management, Inventory & Asset Disposal Management, Human Resources Management, Management of Corporate Governance & Accountability, and Marketing & Export Requirements.
Importantly, the regulations will serve as a valuable playbook particularly for prospective investors who will now know upfront what is in store for them on the regulatory front when they mull a foray into Oman’s upstream sector.
“By having all of the supplementary provisions in place, oil and gas operators will now have greater clarity on what the Ministry of Oil & Gas expects from them in the safe and efficient pursuit of their hydrocarbon activities in the Sultanate. And what we expect from them is proper compliance with these regulations,” the Under-Secretary explained. Furthermore, the new guidelines promise to spur the emergence of a self-regulating oil and gas industry in Oman, according to the official.
“The regulations will enable the operators to self-police themselves in terms of compliance, and where there is a failure to comply, we expect the companies to revert to us at the Ministry with details of this breach, along with their plans to mitigate any fallout or consequences.”
Potential benefits accruing to the industry, and the wider national economy, are expected to be concrete and substantial.
In addition to tangible spinoffs, in the form of cost savings and value generation, the regulations will, among other things, enhance operational and environmental safety. It will improve well and asset integrity, maximise oil production, and provide guidance on budget management, cost recovery and contracting and procurement procedures.
According to the Under-Secretary, the actual roll-out of the regulations will be deliberate and phased to allow for a period of gestation, review and fine-tuning before they become official policy.
The timeline drawn up by the Ministry envisages a six-month pilot phase during the first half of 2018 during which the operators are expected to apply the provisions of the regulations, albeit without the threat of penalties for non-compliance.
“We would like the operators to start getting a feel of the regulations, especially its compliance features, reporting requirements and audits. Hopefully, by mid-2018, the regulations will come fully into effect,” Al Aufi added.