x Abu Dhabi, UAESaturday 22 July 2017

Oman ups oil output

While the GCC's big oil exporters cut crude production to comply with Opec targets, Oman is pumping up its output.

Encouraged by recent successes, Oman's government is in no mood to let the investment drive lose momentum.
Encouraged by recent successes, Oman's government is in no mood to let the investment drive lose momentum.

While the GCC's big oil exporters have recently been cutting crude production to comply with Opec targets, their neighbour, Oman, has been pumping up its output. What's more, the non-Opec Gulf state plans to boost its oil production by another 7 per cent to 8 per cent next year. "There are new discoveries in oil and gas," the Omani oil minister, Mohammad bin Hamad al Rumhy, said in remarks reported this week by the official Oman News Agency. "The sultanate's oil production will reach between 805,000 and 810,000 barrels per day (bpd)." Last month, Mr al Rumhy forecast that Oman's oil production this year would average between 750,000 and 760,000 bpd - roughly a 5 per cent increase from last year. If his projections are borne out, that would put the country on course to reverse a 25 per cent decline in its crude output that occurred between 2001 and last year. Up until 2004, Oman pumped more oil than the Opec member Qatar. However, yields from its ageing fields were declining. "Many of our fields have been producing oil for more than 30 years. Because they are mature, they require new approaches to ensure that they continue producing," John Malcolm, the managing director of state-controlled Petroleum Development Oman (PDO), said earlier this year. But since 2006, PDO, which produces 80 per cent of Oman's crude, has invested heavily in enhanced oil recovery programmes, drawing on the technical expertise of its foreign partner, Royal Dutch Shell. It also made two significant oil discoveries in southern Oman: the Budour Northeast oilfield and a previously undetected oil pool in the Raba-Southeast field. In addition to major international oil companies such as Shell, BP and Occidental Petroleum, which have been pursuing oil development in Oman for decades, the sultanate has recently attracted a flock of smaller companies seeking footholds in the Middle East. Roughly a score of foreign enterprises have been granted concessions to explore for oil and gas and pursue oil development in Oman, including Australia's Oilex, Sweden's Tethys Oil and Denmark's Odin Energi. The UAE's Mubadala Development joined forces with Occidental earlier this year to search for gas in the sultanate. Encouraged by recent successes, Oman's government is in no mood to let the investment drive lose momentum. Attending Opec's Dec 17 meeting in Oran, Algeria, as an observer, Mr al Rumhy rebuffed a plea from the group's president, Chakib Khelil, to co-operate over production cuts aimed at shoring up oil prices on the international market. Crude has fallen by more than 70 per cent since peaking at US$147.27 a barrel in July. Yesterday, oil futures on the New York Mercantile Exchange were trading near $40 a barrel. Oman's failure to contribute to regional oil production cuts may irk other GCC states that are reducing supplies. Those include the UAE, which will cut output next month by 200,000 bpd from about 2.3 million bpd. Saudi Arabia, the world's biggest oil exporter, has borne the brunt of Opec cuts since September, throttling back output to about 8.8 million bpd last month from 9.4 million bpd two months earlier, according to Opec's latest estimates. Oman has also shown determination in other areas to follow an independent path. As GCC leaders gathered this week in the Omani capital of Muscat, the sultanate reiterated its opposition to joining a proposed regional currency union. tcarlisle@thenational.ae