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Oman LNG weighs foray into LNG bunkering

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Oman LNG, majority-owned by the Omani government, says it is exploring the potential to offer LNG bunkering services – a move that will, among other things, further strengthen its bid to remain in productive operation well beyond 2024 when its current mandate expires.

Oman LNG CEO Hamad al Naamany said the initiative, if evaluated to be viable, will help diversify the company’s operations, presently focused solely on the liquefaction and export of natural gas.

“Currently, all of our production is exported. However, although at an early stage, we are considering bunkering as an opportunity, with a small portion of our output going there. At the moment we are trying to figure out who would be the right partner,” Al Naamany said in a recent interview featured in The Energy Year, a leading UK-based energy-centric news portal.

The move comes as growing numbers of ships switch to LNG as a bunker fuel in place of traditional marine fuel oils, which as linked to emissions harmful to the environment and the planet. Moreover, with the International Maritime Organization (IMO) mandating limits on sulphur-emissions, effective from January 2022, leading international shipping lines are moving to decarbonize their fleets initially by retrofitting them to run on LNG initially, and thereafter on zero-carbon ammonia and methanol when the relevant technologies become available cost-competitively on the market.

Oman LNG’s Al Naamany said the company is currently studying the business case for introducing LNG bunkering operations. “We certainly recognise the value of LNG as a big bunkering option coming up as other products – methanol and ammonia – are far behind and we don’t expect to have LNG ships running on ammonia in the medium term. So, we are continuously evaluating and assessing bunkering opportunities, but first you need to have enough ships converted and in your traffic lane to justify such a business.”

He further added: “It is definitely a way to diversify our operations and I think in the next five years, it might materialise.”

If green-lighted for development, the proposed LNG bunkering service will be the second of its kind to the offered by the Sultanate of Oman in the coming years. At Sohar Port, energy major TotalEnergies has plans to set up a bunkering terminal anchored by a low-carbon LNG plant named Marsa LNG.

The 1 million tonnes per annum (mtpa) capacity plant will be owned 80 per cent by TotalEnergies and the rest by OQ Group. Natural gas as feedstock for the LNG project is proposed to come from Block 10 in central Oman, which came into production earlier this year. TotalEnergies has a 26.55 per cent equity stake in Block 10.

Longer term, and as other low-carbon fuels based on green hydrogen derivatives such as ammonia and methanol become suitable for marine bunkering, Oman is looking to leverage its strategic location to become a leading player in this future industry as well.

Last December, an international consortium comprising OQ Group, Sumitomo Corporation, AP Moller-Maersk and Asyad Group, signed an agreement to explore the feasibility of introducing green fuel bunkering at the ports of Duqm and Salalah. The consortium will also assess the potential for green fuel ship-to-ship bunkering operations and green fuel loading operations in Oman ports.

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