Record growth: Average condensate output rose 45pc from 148,000 bpd in May 2020 to 214,000 bpd in June 2021
A sharp increase in the production of condensate – light hydrocarbons that generally occur in association with oil and natural gas – helped the Sultanate of Oman partly make up for cuts in crude oil production in keeping with its commitments under OPEC+ led international efforts to shore up sagging crude oil prices.
Oman’s average crude oil output declined 18 per cent during the May 2020 – June 2021 period from 878K barrels per day to 717K bpd (relative to Jan – Apr 2020). But average condensate output rose 45 per cent over the same period from 148K bpd to 214K bpd, helping ease the impact of the OPEC+ mandated cuts to just 9 per cent over the period in question.
This acceleration in the production of oil condensate, which is not subject to the output curbs agreed under the OPEC+ consensus reached by major producers, helped the Sultanate of Oman “partially” compensate for its output cuts, according to a recent report by the Central Bank of Oman.
“This caused the share of oil condensate in total oil production to jump to 23.0 per cent during May 2020–Jun 2021,” relative to the Jan-April 2020 period, the CBO stated in its 2021 Financial Stability Report. The corresponding share for 2020 was 14.4 per cent, and for 2019, was 13.4 per cent, the report noted.
From the outset of the oil price collapse, the Sultanate of Oman, a non-OPEC member, has worked alongside leading producers and exporters, including Russia, to help lift oil prices from historic lows.
Per its commitments to the OPEC+ deal, Oman limited oil production to its quota of 682K bpd during Phase 1 (May-Jul 2020) of the globally agreed curbs. Output was raised to 722K bpd in Phase 2 (Aug-Dec 2020). It has since climbed to 762K bpd under the current third phase which began in January 2021 and concludes in April 2022. These quotas are relative to the country’s baseline production level of 883K bpd recorded in Oct 2019.
“Oman fully complied with the OPEC+ deal, with an average compliance rate of 108.6 per cent during the period May 2020 – June 2021. The average crude oil production cut in Oman was 13,150 bpd more than needed to fully comply with the OPEC+ deal during this period,” the apex bank noted in the Financial Stability Report.
While crude production declined in line with OPEC+ linked curbs, condensate output jumped 45.2 per cent to a total of 69.10 million barrels during 2020, according to the National Centre for Statistics & Information (NCSI). Condensate is either processed to produce LPG and other commercially valuable product streams or it can be used to blend heavier crudes to improve pipeline flow or to increase its API density.
Likewise, Petroleum Development Oman (PDO), the country’s largest producer of hydrocarbons, reported a record average output of 106,880 bpd of condensate from its Block 6 concession in 2020.
Condensate production from BP Oman’s gas block in central Oman is also projected to rise to an average of 65,000 bpd during the current second phase of its development targeting gas reserves in Block 61.