Muscat: Investments in a landmark Integrated Gas Development featuring a major Gas-to-Liquids (GTL) project, as well as an LNG bunkering terminal, are projected at a ballpark $19 billion, according to a top official of Oman’s Ministry of Oil and Gas.
Salim bin Nasser al Aufi, Under-Secretary, said the LNG bunkering hub is tentatively expected to come on stream in 2024, while the GTL scheme – the first of its kind in the Sultanate – is slated for launch in 2026. The capital costs and timelines are rough estimates and subject to change, he cautioned however.
The integrated gas development, centring on the monetisation of gas resources in Greater Barik (part of the Block 6 concession of Petroleum Development Oman PDO), involves the participation of a number of leading international and local energy firms, notably Shell, Total, PDO and Oman Oil Company (OOC).
Under a Memorandum of Understanding signed with the Ministry last year, Shell and Total have broadly committed to participating in upstream gas exploration and development, a Gas-to-Liquids (GTL) scheme, and a terminal at Suhar that will provide LNG as fuel for shipping.
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 1million metric tonnes per year train offering the flexibility for expansion as required by the development of the LNG bunkering market.
Last month, the Ministry signed an Interim Upstream Agreement with Shell setting out funding and a work programme for 2019 for the development of gas resources destined for the integrated project. PDO, Oman Oil Company (OOC) and Total were also signatories. It entails the integration of Shell’s and OOC’s share of the upstream project with the development of a GTL project to be developed and operated by Shell in partnership with OOC. GTL capacity is envisioned at roughly 45,000 barrels per day.
Speaking about the project at the Ministry’s Annual Media Briefing, held at the Oman Convention & Exhibition Centre yesterday, the Under-Secretary said the cost estimates and well as launch timelines of the GTL and LNG bunkering projects are subject to change.
“Total investment over the project life cycle is around $19 billion, give or take, depending upon what we may find from the FEED, the contracting, and so on. These are very (ballpark) in terms of starting dates, Final Investment Decisions (FID), total investment, capacity, and so on,” he said.
“We haven’t even signed an agreement yet – what we have signed is a Heads of Agreement. Until we sign the agreements, until we do the FEED, until we get the bids from the contractors, and finish the exploration to even confirm that actually the total gas needed for both projects is available in the ground, there is lot that we don’t know at this moment in time. These are numbers as we know them, and we are sharing them quite openly,” he remarked.
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