MUSCAT, JULY 14
Energy companies investing in Oman’s hydrocarbon sector can now directly monetize and market their value-added natural gas production instead of solely relying on the state-owned Integrated Gas Company (IGC) for the offtake of this output, according to Oman’s Minister of Energy and Minerals, Eng Salim al Aufi.
Speaking to Al Shabiba earlier this week, the Minister shared the following, "We have started to adopt a new marketing approach by giving field developers the opportunity to engage in what is called 'monetization' or marketing gas by attracting new projects. The current situation is that the Integrated Gas Company is responsible for purchasing gas for the Sultanate of Oman and selling gas to existing projects. This creates a challenge because they have a price ceiling that cannot be exceeded due to market conditions.”
Al Aufi added: “Therefore, we are allowing companies with the capacity to develop fields to operate, even though the cost of gas is high, as they attract industries that can adapt to higher prices. Additionally, these companies are committed to supplying gas independently from the Integrated Gas Company and any government obligations.” Established in December 2022, the Integrated Gas Company was set up to facilitate gas sales and purchase agreements on behalf of the government. This is in addition to taking over the Ministry of Energy and Minerals’ role as the sole shipper of gas through OQGN’s (OQ Gas Networks) transmission network.
Natural gas is an important source of revenue for the Omani government in the form of LNG exports. According to the Ministry of Finance, net gas revenues amounted to RO 1.868 billion in 2023, representing a sharp drop of 47 per cent from 2022 RO 3.548 billion.
The decline is attributable to the deduction of gas purchase and transport expenses from total revenue collected from Integrated Gas Company, the Ministry has noted.
Oman LNG reported a 21 per cent decline in revenues from $5.774 billion in 2022 to $4.9 billion in 2023, despite an aggressive spot market and contract optimization strategy that contributed over $1 billion in the company’s earnings last year. Of the 173 cargoes of LNG delivered during 2023, 6% constituted spot sales, while the balance 94% comprised shipments based on long-term contracts. A further 31 cargoes of natural gas liquids (NGLs), a byproduct of LNG production, were delivered to domestic offtakers during the year.
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