Oman Will Seek Talks With BP, Shell to Secure Latest LNG Project

The future of Oman’s next liquefied natural gas (LNG) production facility depends significantly on securing investments from prominent energy companies worldwide. This move comes as Oman aims to enhance its LNG capabilities amid a backdrop of economic challenges.

Importance of Private Investments

Oman's economy is heavily reliant on oil and gas production, making it crucial to increase LNG exports for better financial stability. Recent government decisions indicate that funding from the state is no longer an option, and future projects must be able to stand on their own financially.

Engaging Major Energy Firms

According to Energy Minister Salim Al-Aufi, the Ministry of Energy and Minerals plans to engage in discussions with major gas producers, including BP, Shell, and TotalEnergies SE, in the first quarter of next year. The focus of these talks will be to assess the possibility of securing sufficient gas supplies for Oman’s upcoming LNG facility.

Al-Aufi has emphasized the importance of obtaining gas suppliers for the project, stating, "If we cannot secure enough gas suppliers, the entire project could be canceled." He insists that without government assistance, the project is contingent upon the availability of gas feedstock.

Public Finance Challenges

Oman's public finances have historically been among the weakest in the Gulf region. Since Sultan Haitham bin Tariq ascended to power in January 2020, various measures have been introduced to restore financial balance, especially after the pandemic-induced downturn. Fortunately, the nation’s credit rating has shown improvement in recent years.

Existing LNG Facilities

The government currently maintains majority stakes in three operational LNG facilities, supplemented by minority interests from international oil firms and significant gas purchasers. However, only those companies that can guarantee gas supplies to the new facility will be eligible for equity stakes.

“We welcome discussions with any gas-producing entity that seeks to monetize its output as LNG,” said Al-Aufi. “At this stage, only gas producers with equity will be included in the conversations.”

Future of LNG Production in Oman

Oman is evaluating a project for a new train capable of producing 3.8 million tons of LNG per year, located near its existing facilities in Qalhat. If this project proceeds, it would elevate Oman’s total LNG production capacity to 15.2 million tons annually.

Currently, Oman ranks as the second-largest LNG exporter in the Middle East; however, its output pales in comparison to Qatar’s production levels.

Oman, LNG, investment