Oil & gas opportunities in Oman

An Expert's View about Support Services for Petroleum and Natural Gas Mining in Oman

Posted on: 21 Sep 2010

For the last five decades oil and gas has been Oman’s key economic driver and is likely to remain so for the foreseeable future. This will open up moreopportunities.

Sector briefing Oil & Gas Opportunities in Oman Why Oman? For the last five decades oil and gas has been Oman?s key economic driver and is likely to remain so for the foreseeable future. According to current reckoning Oman?s hydrocarbon reserves are thought to last for over 20 years at least. The Government has been investing in long- term oil recovery programmes, improving infrastructure and broadening the country's petrochemical industries base. Oman has signed a number of exploration agreements recently, including four offshore Find general information on OMAN market blocks. Investment expenditure in this conditions on UKTI?s website. The Doing area went up to RO 2,691 million in 2009 ? a Business Guide for Oman gives an overview of 19% increase over 2008. Oman?s economy, business culture, potential opportunities and an introduction to other PDO will be investing $5 billion by 2010 in relevant issue. order to increase output. In February 2010 Petroleum Development Oman LLC (PDO) announced a string of new oil and gas discoveries, including two fields ? one oil and the other gas. The amount of oil in place could be in excess of 1 billion barrels making this a significant discovery. UK Trade & Investment Sector briefing: Oil & Gas opportunities in OMAN ? September 2010 network in the area as part of an early Opportunities production system designed to evaluate the new field. The new Dafiq West field is close to The Sultanate?s annual budget for 2010 the Dafiq field which was originally discovered assumed a higher average Omani crude oil in 2005. A production test well at Dafiq West price of $50 per barrel and a higher daily has already been connected to local production average crude oil production of 870,000 barrels system, joining three existing test wells from in 2010. the Dafiq field. Government revenues have been projected to Once the evaluation process is completed, the increase by 13.6 per cent to RO 6,380 million Dafiq West and Dafiq fields will be jointly in 2010. On the basis of the assumed price of developed. PDO also made a large gas Omani crude the overall fiscal deficit has been discovery at Khulud in the north of PDO?s budgeted at RO 800 million in 2010. Going by concession area. Gas in potentially large the prevailing trends in international oil prices, volumes was found at a depth of more than average price realisation for Omani crude in 5,000 metres in very tight reservoirs with low 2010 may be higher than that assumed in the permeability, and at very high temperatures. budget which may relieve pressure on the Two new wells are currently planned in the overall fiscal balance. area in 2010 to help evaluate this discovery. Average crude oil production jumped from Future Plans: With its oilfields maturing at a 757,000 barrels per day (bpd) in 2008 to rapid pace, PDO is introducing a range of 812,000 bpd last year, exceeding a target of increasingly complex technologies to extract 805,000 bpd and representing an increase of oil. These include thermally assisted gas/oil 55,000 bpd, Output is projected to rise to gravity drainage and steam injection and 860,000 bpd during 2010. On the other hand, polymer flooding, alkaline/surfactant/polymer average oil prices slumped from $101.06 per flooding and microbial EOR. Rising volume of barrel in 2008 to $56.67 per barrel last year. water seeping into reservoirs expected to increase by 35% in the next ten years also In February 2010 Petroleum Development presents further challenges. Investment areas Oman LLC (PDO) announced a string of new oil approved during the current five-year plan and gas discoveries, including two fields ? one (2006-2010) include drilling of exploratory and oil and the other gas ? with significant developmental oil wells, upgrading facilities hydrocarbon potential. and utilities of basic infrastructure, and conducting related studies. PDO?s ambitious PDO made a major oil discovery at Al Ghubar savings and production targets over the next South, close to the existing Al Ghubar and few years and will focus on six key priority Qarn Alam fields. In all, four exploration and areas: appraisal wells were drilled in 2009 to confirm the discovery, and further drilling to delineate ? Well and reservoir management further extensions of the field is planned during ? Operational excellence 2010. ? Human Resources ? Hydrocarbon maturation The oil encountered in the reservoir is both ? Drilling and engineering project heavy and viscous and in late 2009, PDO ? Contracting and procurement successfully carried out a steam trial to prove that the oil can be recovered using existing Boosting reserves through exploration is part enhanced oil recovery (EOR) technologies. of PDO?s oil recovery strategy. PDO will be Also during 2009, PDO made two further oil investing $5 billion by 2010 in order to discoveries at Dafiq West in the north of PDO?s increase output. This will open up opportunities concession area and Anbar in the central region in: logging, drilling, tools, pumps, switchgear of the Sultanate. and equipment. PDO operate an on-line bidding system. For further details, see The Anbar discovery, close to the existing www.pdo.co.om. Sadad field, followed an innovative drilling campaign in which 12 wells were drilled in a Following is a selection of projects underway in grid pattern. Five of the wells encountered oil the hydrocarbon sector. in the Gharif reservoir and these are currently being hooked up to the existing production UK Trade & Investment Sector briefing: Oil & Gas opportunities in OMAN ? September 2010 GAS increased from 12 in 2000 to 22 companies by the end of 2009, operating in 32 concession PDO has also announced new discoveries of areas. large volumes of natural gas - one in a new field and the other in an extension to an The Ministry of Oil and Gas (MoG) will invite existing field. The newly discovered field Simr bids for a total of 11 new hydrocarbon is close to the existing Saih Nihayda gas field in concessions during 2010 in one of the largest Central Oman, where PDO operates one of its ever offerings announced by the government. four gas processing plants on behalf of the These are a mix of oil and gas blocks, some government. located onshore and the others offshore. PETROCHEMICALS Following geophysical studies and seismic surveys in several old and new concession The 2000-hectare Sohar industrial park and the areas, further work is in progress to determine Port of Sohar feature quays specialising in flow rates and sustainable stream discoveries. handling GP cargo and liquid bulk cargoes. This entails more exploratory activity e.g. Those facilities support the following core drilling, testing, and sampling and other In- petrochemical industries among other large field developments. Specialised operators industries. The government are looking involved in the various stages of oil-field specifically for downstream industries to feed development include the following: from these industries, and also for supply industries, or for companies in associated If you have any questions on the opportunities service sectors. above, contact the UKTI contacts named in this report. Business opportunities aimed specifically at UK companies are added daily to EXPLORATION UKTI?s website. These leads are sourced by our staff overseas in British Embassies, High The Royal Dutch/Shell Group has signed an Commissions and Consulates, across all sectors agreement with Oman extending the rights of and in over 100 markets. Petroleum Development Oman (PDO) over the country?s main block 6 concession area until You can be alerted to business opportunities on 2044. [The agreement originally signed in a regular basis by registering on the UKTI 1937, had been due to expire in 2012]. Shell is website. Find out more on UKTI?s business PDO?s main foreign shareholder (34%) and it's opportunities service on the UKTI website. principal technical adviser. Of the remaining equity, the Government of Oman owns 60%, France?s Total has 4% and Partex Oman holds 2%. The need to extend the concession so far in advance of its expiry arose from the long-term nature of the investments required to boost PDO?s declining production. Nevertheless, opportunities for other firms are safeguarded (a) through concession areas not yet granted (b) from a ?ring-fencing? clause in the concession renewal. Trends In June 2005 the Omani Government removed the Mukhaizna field from the PDO concession area and awarded it to Occidental Oman. Other international oil companies are also strongly encouraged to invest in oil and gas exploration and production. And in recent times there has been renewed interest amongst developers for prospecting in Oman. The number of oil and gas exploration and production operators has UK Trade & Investment Sector briefing: Oil & Gas opportunities in OMAN ? September 2010 Major events and activities UKTI contacts Find full details of all events in this Sam Oliver country UK Trade & Investment Officer and sector on the UKTI website www. British Embassy MUSCAT ukti.gov.uk. P O Box 185 Mina Al Fahal, Postal Code 116, Sultanate of Oman New export events are added daily to the site Tel: (00 968) 24 609 258 and you can register to be alerted to them on a Fax: (00 968) 24 609 012 daily, weekly or monthly basis. Email: Sam.Oliver@fco.gov.uk http://ukinoman.fco.gov.uk UKTI?s Tradeshow Access Programme (TAP) provides grant support for eligible Small & Ian Cranshaw Medium Sized Enterprises (SME's) to attend Dy Head of UK Trade & Investment trade shows overseas. Find out more about British Embassy MUSCAT UKTI support for attendance at overseas P O Box 185 Mina Al Fahal, Postal Code 116, events. Sultanate of Oman Tel: (00 968) 24 609 240 Fax: (00 968) 24 609 012 Email: Ian.Cranshaw@fco.gov.uk http://ukinoman.fco.gov.uk UK Trade & Investment Sector briefing: Oil & Gas opportunities in OMAN ? September 2010 Next steps ? ? Arranging appointments ? Organise seminars or other events for How UKTI can help you to meet contacts and promote your company in the Chinese market British companies wishing to develop their business in the Oman are advised to This work is available via our Overseas Market undertake as much market research and Introduction Service (OMIS) a chargeable planning as possible in the UK. service which assists British-based companies wishing to enter or expand their business in UKTI?s team in Oman with its wide local overseas markets. knowledge and experience, can provide a range of services to British-based companies To find out more about commissioning this wishing to grow their business in global work, or accessing other UKTI services and markets. specialist advice, please visit the UKTI website to find contact details for your local UKTI This can include: office. ? Provision of market information ? Validated lists of agents/distributors ? Key market players or potential customers in the Chinese market ? Establishment of interest of such contacts in working with you ? Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Innovation & Skills, and the Foreign & Commonwealth Office), accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. Published 2010 by UK Trade & Investment. Crown Copyright © UK Trade & Investment Sector briefing: Oil & Gas opportunities in OMAN ? September 2010
Posted: 21 September 2010