LNG

Asyad Shipping has agreed to sell minority stakes in the companies that own its two newest carriers, Muscat LNG and Musandam LNG, to two Omani investors. The deal leaves Asyad with 80% of each vessel-owning company and brings domestic capital into the group’s gas-shipping platform.

India is poised to snap up big parts of the substantial volume of uncontracted LNG from the Middle East. Buying interest is on the rise as the Indian government allows utilities to blend LNG with domestically produced gas in a bid to make it more affordable for power generation, compared with coal.

Watch out for uncontracted LNG cargoes, seems to be the motto of Indian commodity traders and large utilities. Looking ahead, Rystad’s Kaushal Ramesh, Vice President Gas & LNG Research, expects savvy buyers to secure large parts of the uncontracted LNG production from Qatar, Oman and potentially Iran – at favourable terms.

“The nation is well-positioned to attract aggressive targeting from Middle Eastern producers and offtakers,” he said, noting nearly 100 million tons per annum (mtpa) of Middle East LNG will remain uncontracted by 2035.”

Flexible, low-cost supply preferred

Some potential pitfalls should, however, be taken into consideration: A key issue is Indian buyers’ history of renegotiating or even abandoning near-complete deals, which creates uncertainty for suppliers.

In Ramesh’s view, “this preference for flexibility and cost-effectiveness over long-term commitments highlights India's focus on securing the best prices for its consumers in a volatile global market – but it could limit LNG growth prospects.”

Delays at infrastructure build-out hampers the development of India’s overall gas and power gen sector. Regasification terminals remain concentrated in the western part of the country, and efforts to expand the gas pipeline network to other regions have been inconsistent.

“Slow progress is due to regulatory hurdles, challenges in securing investments, difficult terrain, and competing priorities,” he criticised, “as India channels significant resources into renewable energy development alongside its gas infrastructure.”

Domestic production can’t meet demand

Come 2040, India’s total gas consumption is forecast to double to almost 114 billion cubic metres (bcm) and despite a 51 percent jump in domestic production to 36.7 bcm by 2025, this will not suffice to meet India’s growing energy hunger. The Asian powerhouse and most populous nation will hence heavily rely on imports to meet its future energy needs.

Long-term contracts, extending way into the 2030s and beyond, help shield India from global price fluctuations and ensure a steady stream of cargoes shipped to Indian shores. Through these LNG offtake accords, India does not only strengthen its energy security but also facilitates a swift exit from more emission-intensive fuels like crude oil, mazut and thermal coal.

Coal still king in India, at least for now

India’s heavy reliance on coal has become apparent during the summer 2024 heatwaves, which temporarily propelled up coal-burn to meet peak power demand. Natural gas, on the other hand, currently accounts for just 2 percent of the country’s power mix – and in fact, coal-generated power is not projected to start falling this side of 2040.

Though gas-burn is unlikely to drive LNG imports, analysts at Oslo-based Rystad Energy believe “the sector could still see growth, however, depending on future policies to promote coal-to-gas switching or introduce carbon pricing.”

Oman, the Arabian Peninsula country and oil producer and long-standing LNG exporter, has been hit by a cyclone, causing major disruption with power cuts and flooding.

The Oil Ministry issued a statement saying that loadings and operations may be temporarily affected as “Cyclone Shaheen” moved along the Sea of Oman.

However, the Ministry said oil fields are far from the path of the cyclone and that there was unlikely to be interruptions to the production of oil nor of feed gas for LNG.

The main Omani LNG export facilities are at the port of Sur on the Gulf of Oman. The plant comprises the three amalgamated liquefaction Trains of two former separate companies, Oman LNG and Qalhat LNG.

Oman exports around 11 million tonnes per annum and its customers include South Korea with around 3.9MT of annual supplies, Japan with about 3MT as well as other leading importers like China and India.

Oman's National Multi Hazard Early Warning System said “Cyclone Shaheen” was accompanied by wind speeds of up to 116 kilometres per hour (72 mph) when it hit the country on October 3, with the cyclone causing heavy rainfall and high waves.

According to the authorities the areas affected by “Cyclone Shaheen” were in the wilayats of Musannah in South Al Batinah Governorate and Saham in North Al Batinah Governorate.

Rescues

There were no clear details of casualties, though dozens of people have been rescued by the Civil Defence and Ambulance Department (CDAA) in different areas.

Oman Air rescheduled 10 flights to an earlier departure time before the cyclone hit.

New gas fields have boosted feed-gas availability for LNG exports in the last few years from the onshore Block 61 comprising the ‎Khazzan field, which began production in 2017, and the Ghazeer field, onstream since October 2020.

Block 61 covers around 3,950 square kilometres in central Oman, and contains the largest tight-gas ‎development in the Middle East.

Gas from the Block is also sent for domestic consumption ‎into Oman’s national gas grid.

Oman is also making progress with developing the Sohar Port and Freezone that is also the future site of an LNG bunkering project on the Arabian Sea coast and near the entry to the Gulf by the Strait of Hormuz.

Oman’s Sohar Port is one of the fastest-growing in the world because of its strategic location.

The Sultanate of Oman is making progress with developing the Sohar Port and Freezone that is also the future site of an LNG bunkering project on the Arabian Sea coast and near the entry to the Gulf by the Strait of Hormuz.

KBR, the US energy and LNG engineering company, said it was awarded a front-end engineering and design contract by Oman LNG for the debottlenecking of liquefaction facilities at the port of Sur on the Arabian Peninsula.

“This project builds on KBR's extensive track record of developing and implementing LNG projects and providing solutions to complex developments around the world,” said Jay Ibrahim, KBR President for Energy Solution Services.

The Omani facilities export to Japan, South Korea and the spot market and comprise the amalgamated three liquefaction Trains of Oman LNG and Qalhat LNG, now producing more than 10 million tonnes per annum.

The Sultanate has revitalised its LNG production after the Khazzan natural gas discovery by BP and the plants near the port of Sur have been at near nameplate capacity since 2017.

The three Trains had previously suffered from a lack of feed-gas as supplies were diverted to fill domestic gas shortages.

The Omani government allocates Oman LNG feed-gas supplies from various gas fields and the Khazzan field production has ended all resource concerns for the near future.

Houston, Texas-based KBR explained that it would act as an extension to Oman LNG's project team and help manage the overall execution of the debottlenecking efforts, whereby better output can be achieved by fixing inefficiencies, both technical and operational.

“The contract underpins Oman LNG's robust commitment towards knowledge-sharing and boosting staff competency in dealing with such complex projects,” said KBR.

KBR’s Ibrahim said the company was excited to be a part of this important project and to continue to grow and maintain its presence in Oman.

French energy major Total and Oman recently signed an accord for the development of an onshore natural gas block that will provide feed-gas for separate LNG production reserved for LNG fuel for shipping in the Arabian Peninsula.

The deal was signed between Ministry of Oil and Gas of Oman and Total and is linked to the award of exploration licence for onshore Block 12 where there are “significant prospective” gas resources.

Total said it would use its equity gas entitlement as feedstock to develop in Oman a regional hub for LNG bunkering services.

Oman is a major anchorage and stop-over point for tankers and other vessels on trade routes between the Middle East, Asia and Europe.

Total has previously outlined plans for its LNG hub project involving a small-scale modular liquefaction plant to be built near the deepwater port of Sohar in the north on the Gulf of Oman.

French energy major Total and the Sultanate of Oman have signed an accord for the development of an onshore natural gas block that will provide feed-gas for liquefied natural gas production reserved for LNG fuel for shipping in the Arabian Peninsula.

Oman is planning to increase its natural gas production for domestic use and LNG exports to such an extent that the sultanate in the Arabian peninsula will see gas output levels overtaking oil by around 2025.

BP of the UK and Italian energy company Eni signed a heads of agreement with the Ministry of Oil and Gas of the Sultanate of Oman to work jointly towards a significant new exploration opportunity in the Arabian Peninsula nation where BP’s onshore Khazzan natural gas discovery revitalized LNG production.

BP said that under the accord, the two companies would work with Oman towards the award of a new exploration and production sharing agreement (EPSA) for Block 77 in central Oman.

BP and Eni will now enter discussions with the Ministry to finalise details.

“This would represent a further deepening of BP’s important position in Oman, building on our successful delivery of the major Khazzan project in 2017 and its second phase of development that is currently under construction,” said Bernard Looney, BP chief executive of the upstream division in reference to additional output achieved by Oman LNG from having sufficient domestic gas supplies.

“We look forward to continuing to explore and efficiently develop the country’s resources, working in close partnership with Eni and Oman to underpin our commitment to delivering long-term gas production for Oman,” he added.

The country’s three existing liquefaction Trains at the facilities near the town of Sur have been at full capacity since 2017 after previously suffering from a lack of feed-gas as supplies were diverted to fill domestic gas shortages.

The Omani government allocates Oman LNG supplies from various gas fields and the Khazzan field production has ended all feed-gas concerns for the near future.

The three Omani LNG processing Trains currently produce around 10.4 million tonnes per annum and supply nations such as Japan, South Korea, India and Kuwait.

Block 77, with a total area of almost 3,100 square kilometre, is located in central Oman, 30km east of the BP-operated Block 61, which contains the already-producing Khazzan gas project as well as the Ghazeer project currently under development.

The Khazzan natural gas field began production in 2017, under budget and ahead of schedule. Khazzan now produces around 1 billion cubic feet of gas a day.

The Ghazeer field is expected to add a further 0.5 bcf/d of production and is expected to come on stream in 2021.

BP has had an upstream presence in Oman since 2007 when it signed an exploration and production sharing agreement for Block 61.

Gas sales agreements and approval for the development of the Khazzan project on Block 61 were signed in 2013. In 2016, the EPSA for Block 61 was amended, adding a further 1,000 square kilometres and allowing a second phase of development.

June 25 (LNGJ) - US engineering company KBR was awarded a project management consultancy services contract by Oman LNG for a new 120 megawatts gas engine power plant aimed at reducing fuel gas consumption and emissions while maintaining LNG output at the liquefaction Trains located in the port of Sur. Under the terms, KBR will assist Oman LNG in the selection and management of the successful engineering, procurement and construction contractor for the project over a three year period. “We are proud of the pivotal role that KBR has played in the development of this project during the pre-FEED and FEED phases and are excited to continue to grow our substantial presence in the Middle East,” said Jay Ibrahim, KBR regional President.

French energy major Total has signed an accord with the Government of Oman to develop an LNG fuel supplies hub for the maritime industry with bunkering infrastructure and a small-scale production plant at Sohar port.