Oman to Initiate Negotiations with BP, Shell on New LNG Project

WPB: The development of Oman’s next liquefied natural gas (LNG) facility depends on securing private investments from leading global energy firms.

Oman’s economy is heavily reliant on oil and gas revenues, and boosting exports could alleviate its financial pressures. However, the government has decided against funding such projects directly, emphasizing the need for them to be self-sustaining.

To assess interest, Oman’s Ministry of Energy and Minerals plans to engage with key gas producers operating in the country, including BP Plc, Shell Plc, and TotalEnergies SE. These discussions will begin in the first quarter of the coming year, according to Energy Minister Salim Al-Aufi.

“If sufficient gas suppliers don’t come forward, the project will be abandoned,” Al-Aufi stated. “The success of this initiative hinges entirely on securing gas feedstock for the fourth LNG train without government support. Without that, we’ll have to close the chapter.”

Oman’s public finances have historically been among the weakest in the Gulf. Since Sultan Haitham bin Tariq ascended to power in January 2020, significant efforts have been made to stabilize the economy, especially after the challenges posed by the pandemic. These measures have led to an improvement in the country’s credit rating in recent years.

Currently, the government holds majority stakes in the three existing LNG facilities in Oman, with minority shares owned by international energy companies and major gas buyers. However, for the fourth LNG train, only firms that can provide gas supplies will be eligible for equity participation.

“Gas producers interested in turning their supplies into LNG are welcome to collaborate with us,” Al-Aufi noted. “But if you don’t produce gas or lack equity in gas, there’s no point in initiating discussions at this stage.”

A feasibility study is underway for the proposed fourth train, which is expected to have a production capacity of 3.8 million tons annually and will be located near the existing LNG facilities in Qalhat. Once operational, Oman’s total LNG production could increase to 15.2 million tons per year.

Despite being the Middle East’s second-largest LNG exporter, Oman’s output remains significantly smaller than Qatar’s, the regional leader in LNG exports.

By WPB

LNG, Oman, Shell