Power sector to weigh gas imports under new fuel policy

MUSCAT, JUNE 30 – A new Fuel Diversification Policy approved by the Omani government earlier this year mandates, among other things, the study of energy alternatives such as imported gas to help supplant domestic natural gas as a fuel resource for electricity generation in the Sultanate. The policy — which green-lights a strategic shift to solar, wind, clean coal and even waste-to-energy as alternatives to natural gas as the primary fuel resource for power generation — was formally endorsed by the high-powered Financial and Energy Resources Council in January this year.

“This policy is a welcome step towards securing the fuel requirements needed to support continued development of the electricity sector,” the state-owned Oman Power and Water Procurement Company (OPWP) said in its newly published ‘7 Year Statement’ for the 2018-2024 timeframe. “Looking to the future, the government has now taken a decisive step to limit the growth in gas consumption by the electricity sector in order to make more gas available to fuel industrial and related economic development,” it stated.

The new Fuel Diversification Policy envisions a substantive role for non-hydrocarbon fuels in power generation in the Sultanate. In addition to a 10 per cent share of capacity from renewables by 2025, the strategy moots the use of clean coal for up to 3,000 MW of generation capacity by 2030. It also calls for a study of alternative sources, including imported gas, in place of local supplies for power generation. “This 7-Year Statement sets out the plans to realise these policy targets with immediate effect,” OPWP stressed in its blueprint.

“OPWP plans to develop 2,600 MW of installed capacity of renewable energy (RE) projects by 2024, aiming to exceed the 10 per cent generation share target. Procurement documents for the first 1,200 MW clean coal plant have been submitted to the AER (Authority for Electricity Regulation) for approval, to be tendered in 2018,” it stated, adding that the company also “expects to complete a study of gas imports in 2018”.
The coal-fired power project — the first of its kind in the Sultanate — is proposed to come up in the Special Economic Zone at Duqm, subject to final regulatory approval, according to OPWP. “The Duqm Clean Coal IPP is expected to provide 600 MW by 2024 and 1,200 MW at full power in 2025, assuming timely approvals. The plant will provide essential power supply to the developing Duqm industrial hub, and export surplus capacity to the MIS (Main Interconnected System covering the northern half of Oman).”
Besides meeting stringent international standards for environmental quality and emissions control, the clean coal project is also expected to reduce the gas requirements of the electricity sector by 4-5 million Sm3/d, which can be earmarked for new industrial projects, it noted.
More than 25 per cent of Oman’s total natural gas output is currently consumed by the power sector — a level the government wants to reduce to help channel this valuable resource towards value-enhancing and employment generating industrial and manufacturing activities.

Conrad Prabhu