Outlays towards oil and gas projects are projected at well over $11 billion in the 2018 State Budget, underscoring the continuing importance of the hydrocarbon industry to Oman’s economic development, a top government official said.
Dr Mohammed bin Hamed al Rumhy (pictured), Minister of Oil & Gas, said the Ministry will continue to stay the course in terms of harnessing the potential of the energy sector in support of the nation’s economic development.
“Our programme will continue as planned,” Dr Al Rumhy said. “Investment planned for 2018 is estimated at $11 for next year,” he noted, citing provisional figures garnered from the Ministry of Finance. “It could be much more if you take into account (four new concession agreements signed on Tuesday). All the companies are eager to come in and get started with their operations. So the total investment next year could exceed $11 billion.”
The Minister made the comments after signing Exploration and Production Sharing Agreements (EPSA) covering the Oil & Gas blocks — 30, 31, 49 and 52 — tendered out as part of the 2016 Oman Licensing Round. The signing took place at the Ministry of Oil & Gas in the presence of high-level officials, as well as representatives of various E&P companies and their partners that secured the licenses to explore for hydrocarbons in these concessions.
The first EPSA pact was signed with Tethys Oil Montasar Ltd, the local subsidiary of Swedish oil firm Tethys Oil, which was been awarded Block 49, a 15,439 sq km concession in the southwest on the Sultanate’s border with Saudi Arabia.
Onshore Block 31, a 8,528 sq km concession in the northwest of the country, was scooped by local Omani E&P firm ARA Petroleum LLC. The third agreement, for Block 31 onshore Oman, was signed with joint venture of Occidental of Oman and Oman Oil Company Exploration and Production (OOCEP).
Finally, the joint venture of Italian energy giant Eni SpA and OOCEP inked an agreement for the exploration and development of Block 52, located off the Sultanate’s southeastern and southern seaboard.
Speaking to journalists, Dr Al Rumhy pointed out that significant investments are also envisioned in downstream ventures during 2018. “We are going to see money being spent on the downstream side as well,” he said, citing in particular the planned construction of the Duqm Refinery, promoted by the joint venture of Oman Oil Company and Kuwait Petroleum International (KPI) with an investment of around $6 billion. “Cheques will be written for that project next year. We will be looking at a 60:40 debt-equity ratio, although not all of it will be spent next year,” he said.
Commenting on prospects for sustaining and bolstering international oil prices in the lead up to the eagerly anticipated meeting of Opec and non-Opec producers set for November 30, 2017, Dr Al Rumhy said: “There is near consensus that the (global output reduction) agreement should be extended till the end of 2018. Oman will support the extension.”
Non-Opec member Oman has lopped off around 45,000 barrels from its daily output as part of a deal reached late last year by Opec and non-Opec producers to help shore up international oil prices. That pact is to expire in March 2018 although most global producers, including the Sultanate, have backed an extension till the end of the year.
The Sultanate will take part in the November 30 meeting, Dr Al Rumhy added.