Iran and Oman are all set to finalize long-awaited gas contracts in the near future, Oman director general of oil and gas marketing said on Tuesday.
"The agreement is a win-win deal and both countries will reap the benefit sooner or later," Ali Abdullah al-Riyami was quoted as saying by ISNA.
According to Riyami, the precise date of signing the contract is yet to be announced. Nonetheless, both Tehran and Muscat are determined to clinch the deal as soon as possible. Interestingly, there seems to be no serious obstacle, as work is proceeding according to plan and conditions are ripe to sign a deal.
Referring to speculations that Iran's gas will be sent to Oman to be converted to liquefied natural gas, the official added, "It is too early to talk about LNG production as natural gas export issues have not been solved completely yet. However, there are no limits to embark on such a mega project as its prospect is promising."
Asked about Oman's LNG production capacity, Riyami noted that Oman's access to cutting-edge technology can make it possible to produce as much LNG as possible. In other words, capacity does not seem to be a big hindrance as it can be expanded easily.
"The most important thing is to get involved with the project, as we are sure such investments will yield a reasonable return," he said.
Hamidreza Araqi, the National Iranian Gas Company's managing director, said protracted negotiations have been underway to convert natural gas to LNG in Oman, but whether Iran should be entitled to sell the produced LNG or Oman has not been resolved.
To export gas to Oman and probably convert it to liquefied natural gas, a 48-inch pipeline will be laid up to Jask Port in southern Iran and will then be extended to the Sea of Oman.
Pointing to Iran's return to international oil and gas markets after the sanctions' termination, the Omani official said, "Iran's return cannot overshadow oil prices drastically as they have already been plummeted due to oil supply glut. Yet we hope Iran's 500,000 barrel a day increase in production does not add to the challenge." Describing the Third Gas Exporting Countries Forum Summit held on November 23 in Tehran as fruitful, he noted that the two states are willing to further expand energy ties in different fields.
$4b Oil Investment
Oman Oil's exploration and production division plans to invest up to $4 billion over the next five years to boost output despite low oil prices, the state-owned company's chief operating officer said on Tuesday.
"For us, low oil prices are an opportunity. We have ambitions internationally to acquire companies and enter joint ventures," COO Suleiman al-Zakwani told reporters at a petroleum technology conference in Doha, Reuters reported.
Oman Oil Company Exploration & Production, which runs onshore blocks and the Khazzan gas plant in a joint venture with British Petroleum, has increased oil output despite a global supply glut that has hit oil prices and revenues.
"We are very active in trying to grow the portfolio, there are a lot of companies out there under stress and looking for someone to bail them out," Zakwani said.
"We plan to spend between $2 billion to $4 billion," he said, adding that OOCEP was looking at opportunities in the Middle East, South Asia and mainland Europe, and would be raising its own funds for expansion from the first quarter of next year.
Zakwani did not give a precise timeframe for the investment drive, but said it was part of an effort to reach production of 200,000 barrels a day in 2020.
He said OOCEP's gas production in 2015 would fall short of a target of 2 million cubic meters per day but the company had not slowed down any of its major projects, at least one of which was running at a loss.
"OOCEP's projected oil production for next year was 30,000 to 50,000 barrels a day," he added.
In addition to spending on acquisitions, Zakwani said the company planned to cut capital expenditure in 2016 by 10% and operating expenses by 20%, against a backdrop of lower crude prices.
Oman is on track for a deficit this year of more than 15% of gross domestic product and lacks the large fiscal reserves of its wealthy neighbors.
Zakwani also criticized the decision by the Organization of Petroleum Exporting Countries last week not to lower oil production.
"We have been hurt as a country. We're losing a lot of money. We do not see any reason for the way OPEC is managing this," he said. "Trying to maintain a market share while all the rest of the world is really suffering makes no sense."
