Sustaining gas production will be bigger challenge than oil in Oman

MUSCAT, NOV1 – Sustaining gas supply to meet the nation’s burgeoning energy requirements will prove a bigger challenge for Oman than crude oil, going forward, according to a top official of the Ministry of Oil & Gas.
Salim bin Nasser al Aufi (pictured), Under-Secretary, made the observation on Tuesday at the conclusion session of the OPAL Oil & Gas Conference 2017 which featured a panel discussion attended by CEOs of leading producers.
Invited to share his thoughts on the opportunities and challenges that lie ahead for Oman’s Oil & Gas sector, Al Aufi said: “Going forward, the challenge will be not so much with oil, but natural gas,” he noted, explaining that although the supply situation has dramatically improved following the launch of BP Oman’s Khazzan tight-gas development, ensuring enough supply to stay ahead of demand will prove daunting.
“For quite some time, we have been saying that gas is the challenge, because we did not have enough to supply the market, but today we are in a completely different position. We have enough gas to supply local industries, meet local demand, and still have a little bit left over. But the challenge is not today, but 7 to 8 years from today — because gas represents a long-term commitment; Once you commit, you need to secure that supply. There is enough for the next few years, but not beyond at this moment in time. Of course, we are doing everything we can to make sure that exploration happens, from PDO and so on, to prolong that position of extra supply than demand in the country.”
Part of the challenge for the sector is to produce enough gas to also make it attractive for investors to set up industries in the Sultanate, he pointed out.
In comparison, however, oil presents less of a challenge, particularly as production will likely remain at the 950,000 barrels per day level over the next 3-5 years, and possibly longer, the Under-Secretary said.
“We are not going to ease up on that challenge in the near future,” he stressed, noting however that oil producers have the potential to ramp up output, but are curbing production in light of Oman’s commitment to the Opec-led production cuts.
Also helping keep the industry relatively profitable are gains made in cutting operational costs through efficiency improvements, said Al Aufi. Unit operating costs are coming down and are just below $9 per barrel. On the other hand, unit development costs for the year — ranging from $23-25 per barrel — are largely driven by projects taken up for development. But this figure is coming down as well, he noted.
Also taking part in the panel discussion were Raoul Restucci, Managing Director — Petroleum Development Oman (PDO), Steve Kelly, President and General Manager — OXY Oman, John Malcolm, Executive Managing Director — OOCEP, Dr Amer al Rawas, Chairman — Oman Society for Petroleum Services (OPAL), and Mohammed al Jahwari, CEO — HydroCarbon Finder Oman (HCF). The session was moderated by Mohammed al Kharusi, Chairman — Intersearch ME Oman.

Conrad Prabhu