Khazzan gas scheme to boost projects market

13 December 2011

Contractors and suppliers are lining up to be involved in Oman’s highly anticipated $15bn tight gas project

The UK’s BP will release a series of tenders in April 2012 for the first stage of engineering on its enormous tight gas project.

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

Everyone in the country will be watching for progress on the scheme. The tight gas that could eventually be produced if BP proceeds with its investment will not only contribute valuable feedstock for industry, but will also set the standard for foreign investment in the sultanate. Estimated at $15bn, the oil major’s investment in the scheme will also be a massive boost for the projects market in Oman.

Over the next two years, an estimated $72bn-worth of engineering, procurement and construction contracts will be awarded in the sultanate, with $11.7bn of these in the oil and gas sector. Oman’s overall project market has been subdued this year, with only $2.3bn-worth of construction and infrastructure contracts awarded so far. The market is often inflated by a single deal. Of the $4.7bn awarded in 2010, $1.8bn came from a single contract to build passenger terminals at Muscat International and Salalah airports.

The Khazzan tight gas construction phase will last for three years and will pump billions of dollars into the economy, providing large numbers of jobs and invaluable experience for Omanis working on such a giant scheme in a relatively small marketplace.

It is not often that Oman gets multibillion-dollar projects. Contractors and suppliers are gearing up to participate in the Khazzan deals as they await BP’s announcement on who its preferred partners will be.

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