Bloomberg News

Oman to Offer Rights at Oil, Gas Blocks in First Quarter

December 13, 2011

(Updates with adviser in third paragraph; BP in fifth.)

Dec. 12 (Bloomberg) -- Oman will accept bids for licenses to explore for oil and natural gas at five onshore areas during the first quarter of 2012 as the country seeks to meet rising energy demand, an adviser to the oil and gas ministry said.

The ministry expects to announce the awards two months after the bidding, Khalifa bin Mubarak al-Hinai said at a conference in the Omani capital Muscat.

“There’s quite a bit of interest from companies who are coming in to view the data,” he told reporters today.

Oman, like many other Middle Eastern states, wants to boost gas production to satisfy higher use of the fuel in its power plants and factories. Domestic electricity consumption is increasing by 8 percent a year, said Adnan Rajab, chief commercial officer of Oman LNG, the nation’s state-run exporter of liquefied natural gas. Oman is the fifth-largest gas producer in the Middle East and the region’s seventh-biggest supplier of oil, according to data from BP Plc.

The country produces 3.5 billion cubic feet a day of gas and uses 1.5 billion cubic feet a day to make LNG for export, al-Hinai said. It wants to reach a final investment decision with BP by early 2013 to develop reserves that the company estimates at 90 trillion to 100 trillion cubic feet, he said. Without the BP project, Oman will need to import more gas, al- Hinai said.

BP’s Spending

BP operates Oman’s largest gas exploration project, energy minister Mohammed al-Rumhy said Nov. 13. The London-based company may spend as much as $20 billion exploring for and developing so-called tight gas in the sultanate, Jonathan Evans, BP’s general manager in Oman, said in October.

Iranian officials will visit next week to discuss possible gas exports to Oman, al-Hinai said. Oman and Iran are a “bit far from an agreement,” and any accord would depend on price, he said. Oman imports about 140 million cubic feet a day of gas through the Dolphin pipeline from Qatar, the adviser said.

Oman’s LNG plants have a combined output capacity of about 11 million metric tons a year and are producing about 9 million tons a year, said Rajab of Oman LNG. The country is supplying LNG only under long-term contracts, he said. LNG is gas cooled to a liquid for easier transportation by ship.

--Editors: Bruce Stanley, Rob Verdonck

To contact the reporter on this story: Robert Tuttle in Doha at rtuttle@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net


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