Oman LNG's Chief Executive Brian Buckley tells it like it is

Well readers. Back to earth after Blue City and the giddy heights of the salaries there, and the desperate lows of Oman's Higher Education and the quality of most of the degrees they sell award.

In a recent conference, CEO of Oman LNG*, new arrival Chief Executive Brian Buckley tells it (almost) like it is, as to why Oman (and his company Oman LNG) aren't selling those spot cargoes anymore.

Because there's no extra gas to sell (apparently).

Photo: Dr. Brian Buckley, CEO of Oman LNG

It also seems a good instruction for CEOs on how enterprising reporters can take a few side remarks and pad it out with a bit of google and boiler-plate to make a whole 'story'.

Anyhow. It seems Oman has the capacity to export a lot more LNG than it is currently doing (around 30% more), with cargoes limited not by the plants at Sur, but by the supply of feedstock gas provided by the Government. (Hence, one of the justifications cited for importing coal for the crazy power plant in Duqm).

This is a pity. It further emphasises the need for more aggressive pricing on electricity (above a domestic minimum) and for better energy efficiency standards in buildings. And perhaps why we keep treating the Iranians so nicely.

It does perhaps beg the question why the Government chose to build a 3rd LNG train (Qalhat LNG) on top of the two we already had as it sounds like we didn't have the gas to actually supply it**, but, hey, we've made more than enough cash from the Koreans [KOGAS] (see who's on the board of the LNG plants) to repay the costs on all 3 LNG trains some time ago, so now its all gravy anyway.

But, boy, not only do we need gas folks, but we have to stop giving it away to Methanol plants and aluminum smelters...

More on this topic to come.

Oman unlikely to have spot LNG cargoes for years
Mon Feb 1, 2010 9:24pm
* Oman LNG produces below capacity
* Only meeting long-term commitments to customers
* Local industry, power, oil recovery have gas priority

ABU DHABI, Feb 1 (Reuters) - Strong local demand for gas means Oman LNG is unlikely to have additional cargoes of liquefied natural gas for sale for years, the company's chief executive said on Monday.

Oman lacks the gas needed to meet both rapidly rising domestic demand and to fill the LNG facility, which therefore produces below capacity, Oman LNG's Chief Executive Brian Buckley told reporters on the sidelines of an energy event.

Oman produces only the 8 million tonnes per year (tpy) it needs to meet long-term supply contracts, he said, three million tonnes below its capacity to ship gas chilled to liquid form for export on specially designed tankers.

With Oman prioritising meeting domestic demand from power plants, industry and the oil industry, there would be no cargoes available for trade in the physical, or spot market, for some time, he said.

"For the next two to five years, spot trade volumes won't be available," Buckley said. "Up to about a year or two ago, we had some volumes for diverting and trading."

Oman itself imports through a pipeline via the United Arab Emirates from Qatar. Despite this and rising domestic demand from power plants and a growing economy, Oman would meet its long-term contractual commitments to export gas in the form of LNG, he said.

"The government is very firm on that, they will meet contractual commitments. It's a reputational issue for them, they will meet their contracts whatever."

Current contracts would expire in 2024-2025, he said. Oman LNG sent a cargo of LNG to Kuwait last year, he said.

Kuwait imported 11 cargoes of LNG last year after opening a new import facility. The country struggles to meet peak demand for gas for power generation when temperatures soar in the summer and residents crank up air conditioning units.

Domestic demand for gas throughout the Gulf region is growing at around 10 percent per year, Buckley said. The government needed the gas to supply the industries it wants to expand to create employment for a growing population, he said.

Gas was also needed for reinjection in oil wells to maintain pressure and output on Oman's fields, he added.

Oman produces LNG from three trains, or production facilities.

Oman LNG is 51 percent owned by the government. Royal Dutch Shell (RDSa.L: Quote, Profile, Research) owns 30 percent, while France's Total (TOTF.PA: Quote, Profile, Research) and Japan's Mitsui also have stakes. (Reporting by Simon Webb; editing by James Jukwey)

*Note: The OLNG website doesn't seem to have been updated since 2006 for some reason

** This is a bit naughty: the capacity wasn't as high as it is now when the third train was ordered; since then there has been some work done to increase capacity beyond original design.