Middle East: Oman

MIDDLE EAST

Dr. A. F. Alhajji, Contributing Editor

Oman

Despite the fact that Oman is not a member of OPEC or OAPEC, the sultanate pledged to implement production cuts of 63,000 bopd in March 1999. Then, when OPEC agreed to increase production this year, Oman announced an increase in its output. Despite the euphoria of foreign investment in the oil sectors of neighboring Gulf states, Oman quietly opened its oil sector more fully to foreign participation.

The Persian Gulf Click for enlarged view

Exploration. Exploration activity declined last year, in response to lower oil prices during 1998 and early 1999. PDO’s total expenditures shrank by $87.3 million in 1999 vs. 1998’s level. Most of the decline was in exploration spending. Nevertheless, PDO was able to add 440 million bbl of oil and condensate to reserves in 1999. The company made the addition through new discoveries, appraisal wells and improvements to established oil fields. Nationwide, 5,947 mi of 2-D seismic were acquired, and 1,734 sq mi of 3-D were shot. This year, the Ministry of Oil and Gas expects only 435 mi of 2-D surveys and 1,017 sq mi of 3-D.

PDO made a significant oil find in Ghafeer, which contributed 60.4 million bbl. Other discoveries in Lekhwair East and Wazer North added 4.3 million bbl to reserves. Improved recovery in existing fields resulted in a net addition of 373.3 million bbl.

Drilling/development. There was a 14% decline in wells drilled, including a 17% drop in oil completions. This year, drilling is expected to rebound 13%, to 320 wells.

PDO’s goals for 2000 are a production capability of 850,000 bopd, further increases in oil and gas reserves, and a lower production cost. Oman is determined to develop its gas resources with the help of foreign companies. Last June, the country launched a new exploration program to increase its gas reserves to 40 Tcf in the coming years. Canada’s Gulfstream Resources Ltd. plans to invest more than $60 million over the next eight years, to develop a gas field in Haffar Block 30.

Last April, Oman inaugurated its first LNG shipment to Korea, as well as exporting its first LNG shipment to the U.S. in July. This relates to a short-term agreement that was signed between Oman LNG LLC and Coral Energy Resources Co. Oman LNG said it will export LNG to Spain in fourth-quarter 2000. It also has supply contracts with Indian and Japanese firms.

Production. Despite the March 1999 pledge to cut output, Oman produced an average 904,000 bopd last year, vs. 899,000 bopd in 1998. The sultanate boosted production after OPEC agreed to increase output this past March, producing 920,000 bopd in April. Oman also produced 1.1 Bcfgd in 1999.

The number of producing oil wells increased 4% in 1999, reaching 2,470. Omani reserves totaled 5.7 billion bbl of oil and condensate, and 29.3 Tcf of gas at the end of 1999.