Oman weighs coal, LNG as alternative fuel resources

By Conrad Prabhu — MUSCAT: APRIL 8 – Oman’s authorities appear to be gravitating towards the idea of coal and liquefied natural gas (LNG) imports as possible fuel alternatives to natural gas — currently the mainstay energy resource for electricity generation and industrial fuel, and as feedstock for petrochemicals. Changing market dynamics driven by the global economic downturn, coupled with the emergence and growing popularity of clean coal technologies, have prompted a serious rethink on the use of coal as a potential addition to Oman’s energy resource mix.

At the same time, Oman’s rapidly expanding industrial and petrochemicals base is competing with the power and associated water sector for natural gas, supplies of which are increasingly constrained in the face of escalating domestic demand. This is also evident from last week’s announcement by the Ministry of Oil and  Gas that new allocations of natural gas to the power industry would remain “capped for some time” as an incentive for the predominantly gas dependent sector to look at fuel alternatives.

Oil and Gas Ministry Under-Secretary Salim bin Nasser al Aufi voiced hope that the moratorium on new gas allocations to the electricity sector would “drive the discussion on renewables and alternative resources”, as well as promote efficient use of the resource in the Sultanate. The strategic shift in longstanding policy governing gas supplies to the power sector is the latest in a pattern of developments witnessed of late, that espouse the pursuit of alternative fuel resources to help diversify the nation’s energy resource mix.

The National Programme for Enhancing Economic Diversification (Tanfeedh) weighed in on this issue last November when it unveiled a far-reaching Energy Policy proposal which, for the first time in nearly a decade, envisions a possible role for non-renewable alternative resources such as coal and petcoke in the manufacturing industry.  A coal-based power plant with a generation capacity of around 500 MW has been mooted at Duqm to cater to the electricity needs of the region’s Special Economic Zone (SEZ).
Taking a long-term view on the likely inclusion of coal in Oman’s energy mix, some stakeholders in the Sultanate are already factoring in this possibility in their development plans. Port of Duqm, for example, is looking at coal berths as part of its master-plan development to support not only imports of this commodity for domestic consumption, but for transshipment as well.
Tanfeedh’s energy proposals also call for investments in renewable energy sources designed to achieve a contribution of at least 10 per cent of the nation’s total electricity demand by the year 2025. It sees the potential for 2,500 MW of solar-based capacity and 500 MW of wind-based capacity to be brought on stream by 2025.
Last week, state-owned national shipping line Oman Shipping Company (OSC) also weighed in on the national debate over alternative fuel resources by outlining the potential for LNG imports to plug any shortfalls in domestic generation capacity or to meet the energy needs of localised entities, such as the Duqm SEZ, for example.
By converting a company-owned vessel into a Floating Storage Regasification Unit (FSRU), LNG can be imported from the international market, regasified on board the vessel, and pumped into the national grid — an option that does away with the need for expensive onshore regasification capacity, says Oman Shipping.  The SEZ Authority at Duqm (SEZAD) and Port of Duqm have both revealed that they are looking at the potential for LNG imports based on the FSRU solution to secure the energy needs of investors in Duqm.