Oman's gas deal with BP not to undermine Iranian gas import


President of BP Middle East says this company expects to start natural gas production from Oman's Khazzan field by 2017 at a rate of 1 billion cubic feet a day.
Michael Townshend, president of BP Middle East told reporters in Abu Dhabi that BP plans to drill 20 wells in 2015 and increase them to 50 wells in the next couple of years, and is already building a plant to handle the first 1 bcf (or 28.3 mcm/d) of gas.
Total investment in the first phase to reach the initial gas production target will be $16 billion.
BP's statement came while Oman and Iran face disagreement on the route of under-water pipeline, aimed to export 10 billion cubic meters per annum of Iranian gas to Oman.
Iran sealed a deal with Oman on March 2014 to export 30 mcm/d of natural gas. It was expected the deal be implemented in three years, or simultaneously with the start of Khazzan. But, Oman and Iran have yet to agree on the route of a 260km underwater pipeline to carry Iranian gas to Oman, Oman’s Minister of Oil and Gas, Mohammed Al Rumhy said last week.
“The first part is to agree on the route. Once we agree on the route we will move onto the second phase, which is the design of the pipeline itself,” Al Rumhy said in Muscat at the ministry’s annual media briefing.
Then, does Oman need Iranian gas anymore?
Oman's gas reserves roughly reach 0.9 tcm. The country's gas production is about 85 mcm/d, while consumption level in 2013 was 39.1 mcm/d, indicates a 3.2 percent increase compared to 2012.
Oman has about 5 to 7 mcm/d of gas imported through the Dolphin system, while the country exports about 10.4 million tons of LNG per year, equal to about 39 mcm/d.
The country's gas injection to oilfield was also about 9.047 mcm/d in 2013, indicates 4.9 percent increase compared to the previous year, H E Salim al Aufi, Undersecretary at the Ministry of Oil and Gas, said February 17, 2014.
Until now, Oman hasn't had any serious gas shortage problem, but the high rate of gas consumption growth may endanger the country's energy security in upcoming years.
The rising consumption prompted Oman’s LNG company to announce that it would divert all of its currently exported volumes of LNG away from foreign markets and toward domestic consumers by 2024, the U.S. Energy Information Administration reported in October 2013.
Then with regarding the high natural gas consumption growth, which increased from 5.5 bcm in 2002 to above 31 bcm (including LNG production) in 2013, signing a gas deal with Iran will strengthen Muscat's energy security as well as gas import resource diversification.

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