Muscat: Oman government is planning to award three blocks for exploration by the end of this year, according to a senior official at the Ministry of Oil and Gas.
"Recently we announced to the media three or four blocks in 2014 for discussion, and we are gearing up to sign probably three blocks this year. That was already marketed last year," Salim Nasser Said Al Aufi, undersecretary of the Ministry of Oil and Gas, told reporters here on Monday.
The latest oil blocks agreements have been with Total Exploration and Production Oman Petroleum B V and Petrogas Kahil for developing an offshore oil block in northern coast and an onshore block in Al Wusta region, respectively.
The agreement with Total was for developing offshore block 41 spread over a large 23,850 square kilometre area off northern coast, while the pact with Petrogas was for onshore block 55, spread over an area of 7,564 square kilometres.
Exports to China
Asked about the reported increase in oil exports to China rather than other importers of Oman oil, he said, "We have two different contracts. There is a term contract with the ministry and that is fixed at the beginning of the year. Then we also sell Omani crude using DME (Dubai Mercantile Exchange)."
"It is not like that the ministry is directing its products to China. China takes its agreed quota and then goes and buy the rest from DME, and we are actually quite comfortable with that because we need DME to flourish and we need more contracts to be executed through DME," Al Aufi said on the sidelines of the inauguration of BP's Technicians Training Centre in Ghala.
On gas imports and production, he noted, "We have not increased our imports…. and our production has not changed unless if there is an upset in one of the fields. But otherwise, it has not really gone up or gone down. It is flat."
Around 110 million cubic metres of gas is being produced per day, he added.
Commenting on the issue of gas flaring, the undersecretary said that efforts are underway to minimise it "even at the expense of sometimes lowering the production."
Benchmark in Asia
Commenting on Omani crude being the benchmark in the Asian market, he said, "It is because of the fact that Oman crude is traded in the stock market in DME. Other crude from the Middle East is not. The price is set by the market and is known two months in advance. We are now in August, and we are already fixing the price for October."
Commenting on gas consumption in oil fields this year, the official said, "I do not think it has declined. Maybe we had some issues in (some fields) where we did not use as much gas as before or (the) electricity (sector) did not use as much gas as before as it has been a mild summer so far. So we have not seen a decline. In fact we are seeing a stretch from our side."
Gas consumption to rise
Al Aufi also said that the total gas consumption in Oman is expected to increase by 10 to 15 per cent every year, dominated by the electricity sector.
He added, "We do curtail how much the industries take in terms of gas" because there will not be enough gas for all of them.
Asked about the latest developments in the project for establishing a crude oil pipeline that will link central Oman with Duqm, he said, "We will need it before BP starts operation because we need to create the flexibility which allows (us) to divert the BP production either to central Oman or to Duqm (or) to the LNG (liquefied natural gas) exports."
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