Natural gas demand from Omani power projects expected to grow by 3% per annum

Muscat: The average annual growth in demand for natural gas for power generation is expected at 3 per cent for the next seven years within the Main Interconnected System (MIS) areas in Oman.
Total natural gas consumption at the main power and desalination plants in 2016 fell by 4 per cent to around 7.01 billion standard cubic metres, which is equivalent to 19.4 million standard cubic metres per day.
“The reduction of 4 per cent growth in natural gas requirements contrasts with the 4 per cent increase in electricity generation over the same period. This significant improvement stems mainly from transmission grid upgrades that enabled better access to the most efficient generation plants,” said a seven-year outlook released by Oman Power and Water Procurement Company (OPWP).
The primary fuel resource for power generation and associated water desalination plans in the main interconnected system is natural gas, supplied to power and desalination plants by the Ministry of Oil and Gas (MoG).
Cap on natural gas supply
Of late, the ministry had indicated that there could be a cap on natural gas supply to power plants. “While MoG has recently approved gas allocations to the next two independent power projects (IPPs) that OPWP plans to procure, MoG has also indicated that future natural gas supply is constrained.”
In case natural gas allocations are not available to the power and water sector, Oman Power and Water Procurement Company plans to bring forward to procure new generation capacity based on a fuel other than natural gas, such as renewable energy and coal projects.
Also, OPWP will discuss with the government the feasibility of importing natural gas specifically for use in power generation, the seven-year report noted.
In fact, peak demand for electricity is projected to increase at an annual average of 6 per cent per year, from 5,920 megawatt in 2016 to 8,960 megawatt in 2023.
Peak demand is expected to grow at a lower rate than energy demand due to the introduction of Cost-Reflective Tariffs (CRT) for large commercial, government, and industrial consumers in 2017.
The CRT is time-differentiated, where the tariff is more representative of the actual cost of supply at the different periods during the year, noting higher costs during peak and summer periods, and lower costs during off-peak and winter periods.
Some large customers are expected to shift their demand in response to the new tariff. OPWP and the Public Authority for Electricity and Water (PAEW) have established a joint task force for the development of wind power plants.
PAEW’s 2016 wind atlas report identified several locations for prospective wind plants, and OPWP plans to develop wind instrumentation stations to support future power development.