Shell to offtake Omani LNG

Thursday, 19 January 2023
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State-owned Oman LNG is to supply 0.8 mill tonnes per year of LNG to Shell. 

This agreement is for 10 years starting from 2025, the official Oman News Agency reported last week.

Shell is a shareholder in Oman LNG.

“We are delighted to sign this term-sheet agreement with Shell, who has been our partner in the industry for many years,” Hamed Al Nu’amani, Oman LNG CEO, said. “This agreement leverages the opportunities to place Oman LNG in a very competitive market, with strong partners allowing us to grow our market access.”

This announcement came on the back of Oman LNG signing binding term sheet agreements to deliver 2.35 mill tonnes per year of LNG to three Japanese companies.

Oman LNG is 51% owned by the Omani Government, 30% by Shell, 5.4% by TotalEnergies and 5% by Kogas, among others.

Clean energy agreements have been signed with Shell covering LNG, green hydrogen and liquefied synthetic gas.

Shell signed a second agreement to join the Green Energy Oman (GEO) consortium. This consortium is involved with a project to optimise around 25 GW of renewables for conversion into green hydrogen, as well as the production, storage and export of green ammonia.

A Letter of Intent (LoI) was also agreed whereby Shell will explore the deployment of liquefied synthetic gas (LSG) in Oman in co-operation with MEMR.

Gas trading boost

Ahead of its results announcement, the energy giant said that its gas trading earnings were much higher in the final three months of 2022.

“There’s probably a bit of relief from investors around integrated gas trading,” said Biraj Borkhataria, an analyst at RBC Capital Markets, talking with Bloomberg. “Last quarter was poor and they were adamant it wasn’t structural. So it’s good to see good numbers coming through on that front.”

The performance swings highlight the opportunities and challenges ahead for new CEO, Wael Sawan, who took over the role recently.

This year could be another volatile 12 months for energy markets as the world contends with the impact of Russia’s ongoing war in Ukraine, a slowing global economy and China’s efforts to lift Covid-19 restrictions.

For example, mild weather sent European natural gas prices plunging to levels last seen before the invasion.

Shell’s LNG output in the fourth quarter of last year was between 6.6 mill and 7 mill tonnes, down from 7.2 mill in the previous quarter, due to problems with the FLNG ‘Prelude’ and QGC projects in Australia. 

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