OPWP to study gas imports for power sector

MUSCAT, DEC 25 – The Oman Power and Water Procurement Company (OPWP) — the nation’s single buyer of electricity and water output — is set to shortly commission an international consultant to study the potential for natural gas imports for the Sultanate’s electricity sector. The move is in line with a broader thrust by the Omani government to secure an increasingly larger share of the nation’s gas resources for value-adding economic sectors, such as downstream industries and manufacturing, and thereby enhance job creation for Omani nationals, drive GDP growth, and bolster socioeconomic development in general.
“The main objective of this study is to allow OPWP to assess the economics and the commercial and strategic risks in importing gas to Oman as a fuel source for power generation, as well as to inform on the most suitable arrangements for gas allocation and supply contracting within Oman’s power sector in coordination with key stakeholders,” the state-owned entity — part of Nama Group — explained.
According to Brian Wood, Planning and Economics Director — OPWP, a number of international consultancy firms are bidding for OPWP’s ‘Gas Import and Contracting Study’. Submissions received in response to OPWP’s Request for Proposals (RfP) are currently under evaluation, he said.
Outlining the basis for the study, Wood explained: “There has been a lot of discussion at high levels of government on what is the best use of natural gas for the benefit of the country and how to maximise value for the country. For example, can we have gas shifted more into industry and potentially limit gas going to the power sector? All the different options will be on the table for evaluation!”
Options for gas imports, Wood noted, could also potentially include supply by pipeline or in the form of liquefied natural gas (LNG) shipped by LNG tankers and then regasified at a receiving terminal (or floating regasification in lieu).
Significantly, the Energy Lab hosted by the Ministry of Oil & Gas with the support of the Implementation & Follow-Up Unit (ISFU) earlier this year, has also strongly championed higher allocations of gas for manufacturing and value-adding industries, while encouraging the power sector to embrace renewable and other alternative energy sources for electricity generation.
Around 97 per cent of power generation in the Sultanate currently depends on natural gas as the fuel source. The sector accounts for around 24 per cent of total domestic gas demand — a share that is projected to jump to 26 per cent in 2023 in line with electricity demand growth.
At the same time, the compound annual growth rate (CAGR) of gas demand in the industrial and manufacturing sector is expected to spike to about 10.2 per cent over the 2018-2023 timeframe, which is twice the rate recorded during the 2010-2017 period.
To ensure adequate supplies of gas as energy and feedstock for industrial and manufacturing investments, the Energy Lab outlined a number of policy measures and concrete proposals to underpin, among other objectives, a reduced dependence on gas for power generation.