Oman LNG documentary – From Strength to Strength – Part One

Pearl of the Arabian peninsula – Oman – the largest non-OPEC oil and natural gas producer in the Middle East

January 25, 2016

In the first part of our documentary with Oman LNG, we explore the country and its flourishing energy sector.

We are serialising our new documentary series on Oman and its liquefied natural gas industry throughout this week. Please subscribe to our channel to get notifications of each new episode as it goes live.

Mohammed Bin Hamad Al Rumhy, Minister of Oil and Gas, Oman: I think the world is moving back towards relying on fossil fuels. The world will need more gas. Oman will rely on this business, I think, for a little bit longer than we thought.

Harib Al Kitani, CEO, Oman LNG: We are a company that has not left any stone unturned. We’re an example of a successful company in Oman and in the region, and we’ve gone from strength to strength.

I think as a model, it’s just one big success.

World Finance: Oman is the oldest independent state in the Arab world. It has a rich history, culture, and economy. But while its agriculture and tourism sectors are still growing, the backbone of the country has been built on its flourishing energy sector.

The Middle East has met most of the world’s energy needs in recent decades – with Saudi Arabia, Qatar, and the United Arab Emirates very much being seen as the region’s heavyweights. But just south-east of these resource-rich countries lies Oman: the largest oil and natural gas producer in the Middle East that’s not a member of OPEC. And with its new oil discoveries outweighing production, it’s making a name for itself in the region and beyond.

Located on the Arabian peninsular, Oman’s proximity to the Arabian Sea, Gulf of Oman, and Persian Gulf, grant it access to some of the most important energy corridors in the world – enhancing its position in the global supply chain.

Mohammed Bin Hamad Al Rumhy, Minister of Oil and Gas, Oman: Oil and gas is taking more of a role in meeting the world’s energy needs. And with all these new sources of hydrocarbons – shale oil, shale gas – I think the world is moving back towards relying on fossil fuels, hydrocarbons particularly.

Because gas is clean and environmentally acceptable, the world will need more gas. Oman will rely on this business, I think, for a little bit longer than we thought. The business will be more active in the coming years, despite challenges.

World Finance: Like many countries in the region, Oman is highly dependent on its hydrocarbons sector. According to the Oman Ministry of Finance, in 2012, Oman’s hydrocarbons sector accounted for 86 percent of government revenues. The sector also accounted for around 40 percent of Oman’s GDP.

But the government is trying to diversify its economy away from oil. And that, in part, is where liquefied natural gas comes in.

Mohammed Bin Hamad Al Rumhy, Minister of Oil and Gas, Oman: Two things happened when we discovered large quantities of gas. We set goals that we wanted to diversify initially from oil. And we thought gas would play a big role, and we did succeed on that. We’ve been doing very well in making gas in general a serious industry in the country.

Then, the other decision we took was to create LNG business, to export gas. And that has done more than what we expected, because almost 10 percent of our revenue in the country is through the LNG business.

World Finance: The Omani government owns a major stake – 51 percent – in the country’s leading natural gas exporter: Oman LNG. And with notable global backers such as Shell, Total, Korea LNG and Mitsubishi, the company is seen as a rising star in the region’s energy market.

Behind me you can see the headquarters for Oman LNG. Since its inauguration in 2000, the plant has grown to have a three train plant operation, and a 10.4 million ton per annum production capacity.

Harib Al Kitani, CEO, Oman LNG: LNG is an energy or fuel of choice. It’s the first and number one green fuel, if you like. It is flexible in its delivery. It is flexible to go to different destinations. And it’s growing: both supplier-side and consumer-side.

You have countries which are not – traditionally, they are not – LNG consumers. Like our neighbours in Kuwait, Dubai, Bahrain. These countries have got oil, but they still want – and some of them are already importing – LNG.

So, you can see the consumer-side is increasing. A lot of countries like India and China are booming in LNG. In Japan, after the nuclear disaster a few years ago, LNG has been replacing nuclear in that country. And on the supplier side, we have now shale gas in the US. Now the US, instead of importing LNG they’re exporting LNG. And Europe is growing. So, LNG is here to stay.

World Finance: In 2013, Oman LNG and Qalhat LNG were combined, in an effort to streamline the country’s LNG sector. The new company – also called Oman LNG – now controls the country’s export capacity.

Harib Al Kitani, CEO, Oman LNG: Oman LNG started production in the year 2000, but it was formed in 1994.

It has been a huge success. And after the success of Oman LNG, the government decided to build another train, with a new company, called Qalhat LNG, with its capacity half of Oman LNG.

And after a few years of also being successful, then it was decided that we merge these two companies, so we don’t duplicate a lot of work. Because we’re dealing with the same markets, from the same source. And almost the same shareholders.

So, it was obvious that there are synergies between these two companies that we wanted to benefit from.

So far we have already started reaping benefits in terms of value creation and savings from combining the two companies. And also showing one face of Oman to the LNG world.

World Finance: That face is located 200km south-east of Muscat, in the small but vitally important city of Sur.

This city has long been associated with sailing and shipbuilding. And it’s here that Oman LNG has based its plant.

Sur’s heritage of welcoming visitors from across the seas makes it the perfect base for international industry.

Harib Al Kitani, CEO, Oman LNG: Oman is friendly to all countries of the world, and we do business to as many as we can.