Oman Is Betting Big On Natural Gas
Oman has weathered all the innumerable challenges of 2020 with considerable flair, even though the year started off with the untimely passing of Sultan Qaboos, then came the coronavirus pandemic and the renewal of OPEC+ production curtailments that have dealt the economy the double whammy of lower prices and lower production.
The Middle Eastern nation is now trying to grapple with the second wave of COVID, adapting to a new way of life under curfew and under increasing fiscal pressure. Whilst much of this year brought no big new on Oman’s oil, its gas segment might be taking over the relay baton as the case of the giant Ghazeer field demonstrates. Oman has heretofore been consistent in its OPEC+ commitments, sticking to the 682kbpd production quota it had agreed to. Under normal circumstances Oman’s output would have been around 930-950kbpd yet difficult times necessitate difficult decisions.
Hence, the 947kbpd rate of production in April 2020 dropped to 679kbpd in May 2020 and has more or less stayed at that level since. The main thrust of the production cut fell on Block 06, operated by Petroleum Development Oman which is partially in the state’s hands. Of the 201kbpd additional production cut that Oman committed to, 135kbpd is from Block 06 and Occidental Petroleum acquiesced to drop output by 58kbpd from its Blocks 53, 27 and 09. Although a testament to Oman’s flexibility vis-à-vis declining demand (despite not being an OPEC member), the country’s 2020 budget assumed that monthly production levels would hover around 965kbpd.
On a national level, Oman has taken resolute measures to make its political presence leaner and more adaptable. Mohammed bin Hamad al-Rumhy who has led the sultanate’s energy ministry for 23 years already, has seen his influence increase as his office was extended into a new Ministry of Energy and Minerals.
The anticipated 2020 IPO of OQ (the successor of Oman Oil, named after the deceased monarch), whereby the Omani national oil company would have become the second Gulf NOC to list its shares (not all though, 20-25% according to preliminary plans), was taken from the actual agenda as there seems to be very little probability Muscat can carry it out adequately given the current circumstances.
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