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50 bn Barrels Potential Oil Reserve in Oman

Source: 8/15/2013, Location: Middle East

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The Sultanate’s potential oil reserves are estimated at 50 billion barrels, of which 5 billion barrels are ready for production, said Nasser bin Khamis al Jashmi, Under-Secretary of the Ministry of Oil and Gas. In an interview with Oman, Arabic sister daily of the Observer, Al Jashmi said that 7 to 8 billion barrels of oil were produced over the past few years, noting that exploration programmes are progressing well and the production technology is being developed. The official ruled out any concerns about British Petroleum. He denied any dispute with the company’s investment in the field of gas, saying that the company is extracting gas and selling it to the Omani government and that there is ongoing negotiation about the price of gas which the company will sell to the government.

A preliminary agreement has been signed by the company with the government and that negotiation is about the final draft of the agreements. He pointed out that no specific model is applied to all agreements signed by the government with the company investing in oil as far as quotas are concerned. That depends on the volume of competition between companies and also on the concession area, said Al Jashmi, who explained that some companies offer the government 60 per cent and some 70 per cent. Sometimes the government’s share is calculated in terms of number of barrels extracted per day. The under-secretary reaffirmed that the government does not bear any cost or risks incurred by exploration or its expenses.

About other aspects of oil production, Al Jashmi said that Al Duqm Refinery is in the stage of studies and designs and the capacity will be about 230,000 barrels a day and it is meant to meet local need for oil products, as well as the setting up of petrochemicals plants to operate alongside the refinery to maximise revenue and support the national economy.

It is also designed to receive oil from abroad and it is expected to start operations in 2017. Speaking about Sohar Refinery, Al Jashmi pointed out that its slowdown was due to change in the characteristics of Omani oil which made its efficiency below expected upgrade standards. The refinery was designed initially to deal with specific types of oil, but, due to the entry of heavy crude in it and the increase of production from Makhaizna oilfield, the refinery’s efficiency was affected, though it did not stop production altogether. In reply to a query about the extent to which labour strike impacted the oil sector last year, Al Jashmi admitted that the oil sector was affected. He said that it is natural any strike would affect the production of any company and the oil sector in Omani was no exception.

Workers’ demand for their rights is guaranteed by law, but it should be routed through proper channels and proper application of law should be observed, Al Jashmi said. Asked whether the issue was resolved, he said that follow-up is being made with the Ministry of Manpower and other departments concerned to check the extent to which the companies have honoured their obligations towards workers.

He added that the oil companies concerned are working to provide suitable conditions to encourage workers to continue in the oil and gas sector which, he said, is one of the most attractive sectors due to its high salaries. Focus is being made on providing a suitable working milieu to mitigate the challenges and enable workers to increase productivity, said Al Jashmi.

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