Oman’s oil and gas sector is expected to benefit from more than $50bn of investment over the next 10 years as the sultanate aims to maintain crude output levels and boost gas production.
The planned projects includes the early-stage $15bn-20bn Khazzan tight gas project being carried out by the UK’s BP, three major oil field developments by state-owned Petroleum Development Oman (PDO) and the construction of a third oil refinery.
The developments by PDO tie-in with its in-country value (ICV) strategy to increase the number of skilled Omanis employed by contractors and to double spending on domestic services and goods by 2020.
PDO plans to spend $30bn over the next 10 years to maintain its current levels of oil production, according to the company’s technical director Amran Marhubi.
The Muscat-based oil and gas group is planning to invest more than $1bn on each of three onshore megaprojects, Rabab Harweel Integrated Project, Yibal Khuff and Budour, which will help maintain PDO’s capacity at about 550,000 barrels a day (b/d).
“Those projects are going to be coming to an investment decision over the next few years,” Marhubi said at the MEED Oman Investment Forum in Muscat on 9 October.
The new projects being planned by PDO will develop nearly 200,000 b/d of new capacity, which will offset the natural decline of the sultanate’s oil fields.
“Our largest projects will implement groundbreaking enhanced oil recovery (EOR) techniques,” said Marhubi. “These include steam injection, chemical injection and sour gas injection. By the end of this decade, PDO will be a world leader in EOR.”
The phase two developments at the Harweel fields in Dhofar, southern Oman, have not yet reached full capacity. “[The project] should have started in 2008-09. It is not yet at full capacity because of technical issues, but we will reach the target,” Marhubi said.
PDO, a joint venture of the Omani government, UK/Dutch Shell group, France’s Total and Portugal-based Partex, produces 550,000 b/d out of Oman’s total crude output of about 900,000 b/d.
Marhabi said the company was working on a ‘made in Oman’ index to assess contractors on the amount of skilled Omani nationals, goods, raw materials and services they plan to source from the sultanate.
“We will work on making sure that those with a higher made in Oman index will be favoured over those with a lower score. It is a work in progress,” the director said. “If you don’t like ICV, we won’t open your technical bid.”
“We can build a better Oman and transform the lives of thousands. When we develop the next three megaprojects … they will be welded by Omanis,” said Marhabi.
In its ICV report in March 2012, PDO set the target of doubling the level of skilled Omanis employed by facilities and project delivery contractors to 30 percent by the third quarter of 2013. It also aims to increase in-country spending from $1.4bn to $3bn a year by 2020.
The sultanate is also expected to benefit from BP’s development of the Khazzan onshore tight gas field on its Block 61 concession. The UK oil major is negotiating with the government over the development plan and commercial agreements for the estimated $15-20bn, which are expected to be finalised in 2013.
The proposed gas plant at Khazzan is expected to produce about 1 billion cubic feet a day (cf/d) of sales gas from 275 to 325 wells drilled in the field. BP has been prequalifying engineering, procurement and construction (EPC) bidders in the second and third quarters of 2012. According to market sources, it has prequalified contractors for at least one package.
Oman is also planning to construct an estimated $6bn refinery at the central coastal port of Duqm. The 230,000 b/d facility, along with a petrochemicals complex, is expected to be completed by 2017, according to Duqm Special Economic Zone chairman Yahya Said al-Jabri, who spoke at MEED’s Oman Investment Forum. The project is a joint venture between state-owned Oman Oil Company and Abu Dhabi’s International Petroleum Investment Company (Ipic).