Oman and Iran finalise a gas deal?

It looks like Oman has finally cracked the Iranian gas deal problem. Several interesting pieces of information are coming together. I know, I know, there have been reports for years on Oman-Iran gas, and many Memoranda of Understanding on the various options signed between the 2 countries, but MOUs are always non-binding, and nothing was looking like progressing, with the Iranians playing Oman off against the UAE, especially Ras Al Khaimah.

At present, Oman is producing the West Buhka gas field offshore Musandam which sits on the border with Iranian waters (on the Iranian side its called the Hengam field and is undeveloped on the Iranian side). What complicated the issue is that the West Buhka field’s condensate and gas production are routed through RAK. ( for example see this article Ras al-Khaimah keen on Iran gas




This 3 way situation (combined with the Americans blocking at every opportunity) has significantly hindered a conclusion. But that looks like its changing.

1/ There have been recent reports from Iran that a deal was close on both the Hengam and Kish gas fields being developed by Oman. This article in The Tehran Times on Sunday was pretty explicit.

The Iranian Offshore Oil Company (IOOC) Managing Director Mahmud Zirakchianzadeh … said Iran and Oman would finalize talks on the development of Kish and Hengam gas fields and gas exports in the near future.

“Oman’s officials have offered good proposals on the development of Kish gas field and exports of Iran’s gas and we are studying them,” said the IOOC head, adding bilateral negotiations were expected to be finalized soon.

2/ Dr Rumhy, Minister of Oil and Gas, is accompanying His Highness Sayyid Fahd Bin Mahmoud Al Said, Deputy Prime Minister for the Council of Ministers who left for Iran today. It’s a pretty high powered delegation, also including HE Maqbool Bin Ali Bin Sultan, Minister of Commerce And Industry. Fahd begins four-day Iran visit today

Fahd will be accompanied by an official delegation comprising HH Sayyid Haitham Bin Tariq Al Said, Minister of Heritage and Culture; HE Yousuf Bin Alawi Bin Abdullah, Minister Responsible for Foreign Affairs; HE Maqbool Bin Ali Bin Sultan, Minister of Commerce And Industry; HE Dr. Mohammed Bin Hamad Al Rumhy, Minister of Oil and Gas; HE Hamed Bin Mohammed Al Rashdi, Minister of Information in addition to a number of government officials and OCCI chairman

OK. We’ve been here before you might say. But in addition…
3/ A reliable source at engineering consultancy McDermott tells me that they have been recently contracted by the Oman Government to do the pre-front end engineering and design [pre-FEED] feasibility for a new gas import facility in Musandam.

This is pretty important. Its fine to discuss gas, but if the engineering work is starting, a deal must be very, very close. There is only one place that gas will be coming from - The Iranian fields in the straights of Hormuz, ie Hengam and Kish.

Expect something official in the coming months. It would be great news for Oman, especially if the price is right.

Tomorrow, more on inflation and Omanhell.