Oman and Iran yet to decide gas pipeline route

14 April 2015

Key infrastructure project stuck at pre-design stage; pricing will be left until end of construction

  • 260km-underwater pipeline to supply Oman with gas
  • Project delayed as route is not confirmed
  • Pricing also still to be agreed

Oman and Iran have yet to decide on a route for a planned 260-kilometre underwater pipeline linking the two countries, according to the Omani oil and gas minister.

Tehran and Muscat signed an agreement to build the over a year ago and had an ambitious timeline to complete the project within two years.  The deal was reportedly a 25-year supply agreement valued at about $60bn.

“The discussion is going on. We are working on the route and once we know this we will move it to the second phase, which is the design of the pipeline itself,” said Omani Oil and Gas Minister Mohammed al-Rumhy speaking in Muscat on 13 April.

Al-Rumhy said the two sides would leave the issue of pricing the gas until the end of the project.

“Many factors will determine how we price it. The ultimate goal is to build it as an infrastructure project and we will deal with the price when that part is over,” said the minister.

“In the past we used a different methodology to find the price first and that in my opinion that caused failure… to develop this project 10 years ago. This time we wanted to try a different way,” he added.

Oman exports gas in the form of liquefied natural gas (LNG) volumes have fallen in recent years, while the sultanate also imports gas from Qatar to meet demand.

Imports of gas from Iran would help it to meet demand from the power sector, but could also boost LNG exports and provide feedstock and energy to develop new industrial projects.

Al-Rumhy was asked if the Iran pipeline coinciding with the completion of the $16bn Khazzan Tight Gas Project would create a large surplus of gas in a short timeframe.

“[A surplus of gas] is a nice problem to have for a country. We have not started to market the Iranian gas yet because of the uncertainty of the delivery time,” he said.

“We are surrounded by people who need more gas. [Oil producer] Petroleum Development Oman (PDO), for example, have a number of recovery projects that they could start if we had more gas. And a lot of industry is looking for gas,” added Al-Rumhy.

Stay informed with the latest in the Middle East
Download the MEED app today, available on Apple and Android devices

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications