OBG talks to Harib Al Kitani, CEO, Oman Liquefied Natural Gas (Oman LNG)

Interview: Harib Al Kitani

What is being done to ensure that natural gas requirements for large-scale utilities and industrial projects have adequate feeder stock?

HARIB AL KITANI: It is evident that gas has become increasingly important – and an official priority – in Oman. The government has invested a lot of time and capital in the upstream area to achieve the sustainability of the gas and LNG sector. Oman has welcomed numerous foreign companies to explore for gas, which has its own separate policy from oil. While at the moment Oman’s gas sector is tight for adequate long-term feeder stock, the future looks secure as the government is spending heavily to ensure the utilities infrastructure meets demand, large industries such as LNG continue to be fed gas, and greater capacity is developed as the industry expands and more entrants arrive. Overall, we see concerted efforts being made across the board, and with BP’s plans for extraction, hydrocarbons in Oman is set for a golden era.

How is the sector balancing domestic gas needs while also generating foreign export revenues to sustain strategic national infrastructure projects?

AL KITANI: Oman LNG has a plant capacity to annually produce over 10m tonnes, but we are now short of LNG by 1.5m tonnes, as there is not sufficient gas in the upstream segment. We have the capacity to absorb more gas and so we are working with the government to find additional gas to fill our plant to its maximum. But it must be emphasised that domestic needs will always take priority over foreign export requirements. If there are any shortfall or technical issues upstream, it will not be domestic consumption that suffers. In striking the balance, the government earmarks only certain quantities for export projects, and prioritises gas for both domestic power and water production. Looking after the well-being – and ensuring the future prosperity – of the Omani population and industrial base are two of the primary goals for Oman LNG and the Ministry of Oil and Gas.

To what extent is the exploration of unconventional, deep gases bearing results, and how is safe and reliable extraction being ensured?

AL KITANI: With recent investments in exploration at the most advanced stage being announced, particularly by BP, there will be much to find in terms of tight and deep gases in pockets rather than one reserve. These are extremely expensive to remove, necessitating unconventional discovery and extraction methods.

However, there is talk of other operators finding signs of shale gas. These discoveries are only at the study phase, though more research will take place.

We hope that in the coming two to three years BP’s explored areas will begin producing, relieving a lot of the pressure on Oman’s constrained gas supply.

The focus right now is on exploration (phase one of the oil production cycle); according to initial reporting, the combined reserves could be in the range of 50trn to 100trn cu feet – a massive surplus of gas – of which around 40% will be producible.

In what ways has policy been shaped to support and incentivise local participation in Oman’s oil, natural gas and LNG sectors?

AL KITANI: The focus has changed and Oman has entered full-steam into the in-country value scheme, which develops local community small and medium-sized enterprises (SMEs) and promotes local services in the oil and gas sector. The key idea is to increase the amount of revenue staying in Oman, thereby building the capacity, expertise and professionalism of local enterprises.

There is a special task force in place to ensure that domestic SME businesses profit from the activities in the sector. We are learning from effective global practices and want commitment from the entire sector in order to increase knowledge, technology and industrialisation, because the sector will only thrive in the long term with the help of SMEs, providing jobs in gas-based services and manufacturing.