Oman’s oil production costs to come down

The unit operating cost for per barrel of oil is likely to come down to in the range of $8.3 or $8.5 from around $9.5 per barrel in the previous year  

Vinod Nair -

MUSCAT, JAN 23 -

The unit operating cost for per barrel of oil is likely to come down to in the range of $8.3 or $8.5 from around $9.5 per barrel in the previous year, said Salim al Aufi, Under-Secretary of Ministry of Oil and Gas yesterday. It can be attributed partially to improved productions and partially due to reduced costs. He said the savings on the cost for 2016 was close to $1.5 billion, but added that the numbers are been still finalised and will be presented during the annual press conference in April.

Al Aufi said the unit cost for heavy oil production is in the range of $12-13 while that for light oil is between five and six US dollars.

Aufi said Oman need to focus on more gas production and added that the quality of Omani crude is getting heavier.

Speaking on the sidelines of the Middle East Crude Conference organised by Argus Media in Muscat, Aufi said the oil production target for the first six months is around 970,000 bpd and it has to be decided whether there will be a need for a cut or return to the original levels.

It may be noted that Oman’s output cut estimated to be around 45,000 barrels per day has come into effect and it has been revealed that already 1.5 million of 1.8 barrels have been taken off the market since an agreement was reached between Opec and Non-Opec countries late last year.

Experts, however, exercised a word of caution by saying that while the recovery is welcome because the lower prices lasted for almost 30 months. At the same time, China’s energy consumption has dropped drastically in the previous year.

On the possibility of the Opec members continuing with its plans to cut oil output, one of the experts pointed out that it is generally believed that the most consuming countries want stability in supply, which may come at a price.

One of the experts said that the developments in the oil transportation sector may see the likelihood of more US crude coming to the market, if not in the immediate future.