‘We are ready to tackle drop in oil price’

Business Monday 02/September/2019 21:17 PM
By: Times News Service

Muscat: Oman will be able to manage its economy even if global oil prices drop to $40 a barrel, the country’s Undersecretary of Oil and Gas has said.
Speaking to Times of Oman at the World Heavy Oil Conference and Exhibition, Salim bin Nasser Al Aufi, said the oil sector would be able to continue production even if oil prices were to fall significantly.

Al Aufi said: “International oil prices are difficult to predict. Of course, we hope that there will not be a significant decline, but in general, even if the price of oil drops to $40 a barrel, we will not be affected. The oil and gas sector in The Sultanate is able to continue its business and production.”
According to him, heavy oil accounted for 15 percent of the Sultanate’s output. He added: “The Sultanate’s production of heavy oil accounts for 15 per cent of the total production, where the Sultanate currently has five oil fields producing heavy oil, with the sixth field under review at the Ministry at the moment and the seventh field in the exploration phase.”

Although the Sultanate is currently expanding its economy to include more revenue from non-oil areas of activity, fossil fuels continue to remain a crucial part of the economy, and more exploration and drilling operations are currently underway.
When it comes to the allocation of exploration and drilling activities among oil companies in the Sultanate, the land is divided up into blocks, which is then distributed to companies to carry out their activities.

Italian company ENI are one of the many operating in Oman and are exploring the possibility of setting up offshore fields in the Sultanate. Commenting on this Al Aufi said, “Block 52 is with the Italian company ENI and the first drilling is expected by the end of this year or in the first quarter of next, but depends on the provision of offshore rigs. In addition, test plans had been approved for Masirah, while the Bukha field in Musandam is still in production.”
Adding to this, Dr Saleh bin Ali Al Anbouri, the Director General of Planning and Studies at the Ministry of Oil and Gas, stressed that the percentage of the Sultanate’s production of heavy oil, which stands at 15 per cent of the total oil production, could possibly increase in future.
“The Sultanate is at an advanced stage in the production of heavy oil, which is considered affordable. The cost of production in the Sultanate is similar to what is known globally, which is between $15 to $20 per barrel.”

He added that the country was looking at more environmentally friendly ways of extracting oil, such as the use of solar energy to power the extraction machinery. “This was done in cooperation with Glass Point, and I think this is crucial towards providing support to the production of heavy oil, reducing the cost and helping in extraction. Instead of pumping gas to power the steam injectors, we can now use solar energy and can store them in reservoirs, which reduces future cost.”
With regards to offshore fields and exploration, Al Anbouri said: “We have recently been able to attract a big company, the Italian organisation Eni, which extracted gas from the Eastern Mediterranean in Egypt and now we hope to be successful in the Sultanate.”

With oil continuing to be an integral part of the economy for the foreseeable future, four companies in Oman – Petroleum Development Oman, Oman LNG, Shell Oman and the Omanoil - Orpic Group signed a five-year agreement to provide more jobs for locals in their factory maintenance departments. A turnaround entails the shutdown of a plant for a period of time for maintenance, refitting and inspection purposes before it is brought back on stream. This allows for the validation of the technical integrity of equipment, materials, plants and systems; it also permits the collection of data, which may assist in reducing the time needed for future turnarounds, thereby cutting potential losses from deferred production or unnecessary work.

Turnarounds are fundamental to the safe and efficient operation of an installation but, due to the irregular nature of the requests for such services, companies in Oman carrying them out are currently supported by a range of local, regional or international contractors. The total workforce for a 20-day turnaround can reach up to 800-900 people with major shutdowns involving 1,200 or more depending on the size and complexity of a plant. However, it is believed that aggregating the demand from the four oil and gas companies and providing consistent and continuous work will encourage the localisation of turnaround services and increase Omanisation levels.

PDO Managing Director Raoul Restucci said: “The Turnaround project is a great example of key operators, covering the full spectrum of up/mid and downstream operations in the Oman oil and gas industry, working collaboratively together to deliver in-country value. The project will deliver key and fundamental skills and services in Oman by Omanis. By integrating and synchronising our major facility shutdown and maintenance plans, we have secured the scale, scope and continuity of work that will enable us all to develop and deploy Omani talent in a cost-effective and sustainable manner within and beyond our industry.”