Over the last decade, Oman has done an excellent job of reinvigorating its ailing oil reserves. Advances in enhanced oil recovery techniques have increased oil production to nearly 1 million barrels a day (b/d) from a low of 714,300 b/d in 2008.

This is good news for the sultanate. It relies on oil and gas for 80 per cent of export revenues and 40 per cent of gross domestic product. The problem is, Oman only has about 30-40 years left of significant oil reserves. It will soon have to fill the export gap with other products.

Creating new industries is going to require increased power supplies and access to a reliable feedstock. This makes UK-based BP’s $15bn Khazzan tight gas project essential.

If it gets the green light, the Khazzan scheme will be the largest foreign investment in Oman by a single firm and will contribute 1 billion cubic feet of gas a day to the sultanate.

The Khazzan project is not just a mere gas supplier. The construction phase will last for three years and will pump billions of dollars into the economy. Omanis will also gain vital experience from working on a mega-project. This experience can only have a positive effect.

The Khazzan project will act as a catalyst for further investment by international companies in Oman

What is also vital is that a mutually beneficial and harmoniously negotiated gas sales agreement is made between BP and the Omani government. If this can be achieved and the construction phase runs smoothly, the Khazzan scheme will set the standard for foreign investment in Oman and will act as a catalyst for further investment by international firms. 

For BP, the Khazzan project offers the opportunity to gain first-mover advantage in the region’s tight gas industry. Tight gas is notoriously difficult to extract and only a few companies have the technology and the financial resources to extract it.

If BP and Oman get it right, the Khazzan scheme will help provide the sultanate with a stable gas supply for the next 30 years.