Global energy giant Total envisions a significant place for Oman in its expanding portfolio of LNG related investments that provide liquefied natural gas as bunker fuel for merchant ships, particularly container vessels.
The proposed investment, centring on the establishment of an LNG bunkering terminal at the Port of Sohar, stems from a Memorandum of Understanding (MoU) reached with the Omani government earlier this year, according to a high-level executive.
Elias Kassis (pictured), Vice- President North Africa — Total Exploration & Production, said the proposed scheme will build on Total’s long-standing role in the development of the Sultanate’s energy industry.
Total’s pursuit of integrated gas projects, encompassing the development of the entire gas value chain from upstream to downstream, is sought to be replicated in Oman in collaboration with the government and other partners, said Kassis.
“It is this type of project that we are currently discussing with the Omani government following the MoU signed back in May to develop an integrated LNG bunkering scheme from upstream to market,” the executive announced at the Gas & LNG Middle East Summit on Monday.
The MoU effectively brings together energy majors Shell, Total and Occidental, along with state-owned Oman Oil Company, in a partnership designed to help monetise the Sultanate’s newly discovered gas reserves. Under the MoU, Shell and Total have broadly committed to participating in upstream gas exploration and development, gas-to-liquids (GTL), liquefied natural gas (LNG) and renewable energies.
Total and Shell as operators will develop several natural gas discoveries located in the Greater Barik area onshore Block 6, with respective shares of 25 per cent and 75 per cent, as per the agreement between both companies and before possible State back-in.
The objective is to achieve an initial gas production of around 500 million cubic feet per day (MMcfd) and a potential to reach 1 billion cubic feet per day (bcf/d) at a later stage.
Total, for its part, will use its equity gas entitlement as feedstock to develop a regional hub in Oman for an LNG bunkering service which will supply LNG as a fuel to marine vessels. This entails the establishment of a new small-scale modular liquefaction plant to be built in Sohar Port.
The plant will comprise a 1 Mt per year train offering the flexibility for expansion as required by the development of the LNG bunkering market.
The proposed venture, said Kassis, will seek to capitalise on new fuel regulations issued by the International Maritime Organisation (IMO) obliging ship-owners to use low sulphur bunker fuel with a sulphur content of no more than 0.5 per cent effective from 2020. The move has the potential to position LNG as a promising alternative to conventional bunker fuel, he noted.
Total, the executive said, is a pioneer in the LNG bunkering business globally. Its marine fuels division recently signed contracts with CMA-CGM, one of the world’s biggest shipping companies, to supply their new fleet of containerships from 2020.
Earlier, Total inked a deal with Pavilion Energy of Singapore for the joint development of an LNG bunker supply chain in the Port of Singapore.
According to informed sources, the proposed scheme in Oman is expected to come up in the Sohar South reclamation area, adjoining the Sohar Port’s hugely successful petrochemicals cluster.