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Bad weather halts Oman oil production

Lifters of Oman crude expect delays in cargo delivery of up to five days after Cyclone Phet hits the country's coast.

MUSCAT // Oman halted its oil and gas production due to bad weather as Cyclone Phet hit the small oil-producing country's coast, but no facilities were damaged, DPO and Oman LNG spokesmen said today. "We won't load any oil because no ship is able to anchor at our facility due to rough seas," a spokesman for state-controlled Petroleum Development Oman (PDO), an affiliate of Royal Dutch Shell RDSa.L, Mr al Busaidy added.

"The last load to ships was yesterday," he said. Lifters of Oman crude expect delays in cargo delivery of up to five days and are mulling supply options after PDO halted oil exports. In the first quarter of 2010, crude oil and condensates exports stood at 731,000 barrels per day, according to official government data. The latest storm path forecast shows Phet heading close to Sur, where Oman's three LNG production facilities, known as trains, are located. Oman LNG already shut down one LNG train on Thursday night, said Oman LNG spokesman Nasser al Kindy.

"We are now in the process of shutting down the rest as a precaution. We do not expect to miss out on any cargo delivery," he said, adding that no LNG facilities have been damaged. Qalhat LNG, which supplies Spain and Japan, would also be shutting down its trains, he said. Oman's LNG trains have total capacity to produce over 10 million tonnes per year of LNG, though in reality Oman produces closer to 8 million tpy of LNG.

Phet, downgraded to a Category 2 storm, hit eastern Oman on Thursday with winds up to 120 kmph and heavy rains of up to 331 mm, the state television said. The station said heavy rains were expected in Muscat today near the port of Mina al-Fahal, where Oman's crude is exported. Mr Busaidy said the port had not been damaged. "The Mina Fahal exporting facility is fine," he said. Some refiners in Asia are evaluating if they need to buy prompt cargoes, while others expect the impact from the disruption to be limited since any temporary shortages can be resolved by existing inventories, traders said. They added that it may offer some support to Omani crude which is currently not much in demand. One of the Asian refiners said the loading of their Oman cargo will be delayed by three to five days and they are evaluating whether or not to buy a prompt cargo. "I don't think it a big problem if there is no damage on facilities," said another trader. "Refiners can use inventory to resolve delay of delivery and may not need to find alternatives," he said, adding that any disruption to Oman's shipments would be limited to around 2.0 - 4.0 million barrels if the cyclone lasted for three to five days. Traders were reluctant to take Oman cargoes last month, saying the price was expensive after other Middle East producers cut the official selling prices of rival medium heavy grades. * Reuters

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