Oman LNG Eyes 20% Output Rise

Oman LNG expects to lift liquefied natural gas (LNG) production as much as a fifth by sometime in 2016 or 2017, allowing it to tap into its spare capacity and boost exports, a top company official told Reuters.

The company, which produces around eight million tonnes of LNG a year, is anticipating new tight gas reserves to come onstream over the next two to three years, Brian Buckley, chief executive of Oman LNG, said on the sidelines of a gas conference in Malaysia.

Total installed LNG capacity is 10.4 million tonnes per year (tpy), running through three trains, or production facilities, each with capacity of about 3.3 million to 3.4 million tpy.

“We expect to be able to utilise our spare capacity of around 1.5 to 2 million tonnes (per year) sometime between 2016 and 2017,” Buckley said.

“That is when we see the domestic supply situation easing, mainly because of additional gas coming onstream.”

The sultanate’s average gas production in 2011 also increased to 95.1 million cubic meters per day, up 4.4 per cent from 2010, an official from Oman’s oil and gas ministry said in February.

British oil major BP is expected to make a final decision on proceeding with a $15 billion investment in Oman’s Khazzan tight gas project by the end of 2012, Buckley said.

BP won the concession in 2007 and has spent about $700 million on it so far.

“They explored and had a number of production wells just to demonstrate viability, that was the first stage,” Buckley said.

“Now the second stage is the commercial negotiations from expanding from this level to full commercialization… it will take about two to three years for full production.”

The Khazzan tight gas project could potentially have up to 100 trillion cubic feet of gas in its reserves, which is significant for a small country like Oman, Buckley said.

But it was still too early to say just how much of that would be realised at production, he said.

Oman LNG, which currently supplies into Japan and South Korea in Asia, is looking at the possibility of expanding its network into India when it is in a position to offer more volumes, Buckley said.

“The obvious customers are still in the Asia-Pacific region – Japan, Korea, China and India – which is closer to us, so that is of particular interest,” he said.

“India is already practicing deregulation to some extent, also some of the domestic gas fields on, and offshore, aren’t as productive as they hoped it would be, so the demand for LNG there is starting to grow significantly.”

Oman LNG is 51 per cent owned by the government of Oman. Royal Dutch Shell owns 30 per cent, while France’s Total and Japan’s Mitsui also have stakes.