Muscat nears multi-billion-dollar gas deal with Iran

03 October 2008
Oman and Iran in final talks to secure 3 billion-cubic-feet-a-day deal following 2007 agreement.

Muscat expects to sign a multi-billion-dollar contract with Iran to import up to 3 billion cubic feet a day (cf/d) of gas by the end of this year in one of the sultanate’s biggest-ever energy deals.

It follows confirmation that Oman will be ready to import 200 million cf/d of Qatari gas via the Dolphin pipeline by the end of October, after a four-month delay due to compression problems at a receiving plant on the Omani side.

Together, the two deals should mean that Muscat is able to meet the expected rising demand for gas in the country.

A senior official from Oman’s Oil & Gas Ministry tells MEED that talks are ongoing and that he is confident of securing a contract by the end of the year.

“It is progressing well and we expect a firm agreement within a few months,” he says.

The official says the first phase will supply 1 billion cf/d, with two further phases to eventually take the country’s imports from Iran to 3 billion cf/d.

“That figure [3 billion cf/d] has been talked about and can be done from the Iran side,” he says.

“We are concentrating on 1 billion cf/d first, but there is plenty of room for expansion after that.”

The expected contract between Muscat and Tehran comes after a memorandum of understanding was signed by the two governments in June 2007.

Supplies will be delivered to Oman’s Qalhat liquefied natural gas plant via a 200-kilometre pipeline from Kish island in Iran to Musandam and Sohar in Oman.

National Iranian Oil Company (Nioc) forecast production of 3.5 billion cf/d from the field, with about 75 per cent of all gas reserves understood to be recoverable.

The Omani official says the two countries have also held talks about the development of other Gulf gas fields - Hengam, by the Iranians, and West Bukha, by Oman - although short-term production is expected to be modest.

Demand for gas is high in the sultanate and is forecast to reach 3.8 billion cf/d by 2010, well above the planned supply of 2.6 billion cf/d, according to the Oil & Gas Ministry.

Dolphin Energy released a statement last month in which it pointed out that it was ready to start deliveries to Oman of 200 million cf/d.

The Muscat official says that he has been assured by the Oman Gas Company that a compression station in development at Buraimi will be ready within the next few weeks.

“We will take our full share of 200 million cf/d and there will be no more delays,” he says.

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