Wednesday, May 14, 2008

Rice and Qatari Gas, plus Some questions for the Majlis

Sorry for the lack of posts for a while – not only have I been super-busy, but also not a lot of news anyhow. So a couple of items on rice and imported gas.

Ministry tries to pretend there is no problem.
World food prices continue to soar, especially rice. But fear not Oman, the Ministry of Commerce and Industry is subsidising rice for the population, so there’s no need to worry. These statements are dutifully reported by the press here, with no actual analysis or questions.

Of course, in the current situation, I’d have to disagree with the official who described hoarding of rice as 'unjustified'. It seems highly justified. When the free market price of something you need increases by 70% in a few weeks, and seems likely to keep rising, buying in bulk seems a pretty good return on capital.

Plus, buying in bulk is what Oman residents have been doing for years. Whenever a nice and perhaps unusual imported item arrives, we Expats always tend to buy shedloads, as usually when you only buy 1 or 2, when you go back to the supermarket it’s missing for months! I can remember last year when the Carrs Cracker ship seemed to be delayed for about 4 or 5 months. The Dragon likes his cheese, and you can’t enjoy cheese without a decent cracker.

So, the country is now subsiding rice, oil, flour, cement and petrol... And nationalizing the cement distribution system. All this micro-economic distortion is very inefficient. Governments are usually pretty crap at the supermarket business and at guessing what people want and need. But the Government also seem unable to increase the wages of the general population. The Government’s rice is, of course, also pretty low quality, surprise surprise. If you want decent rice, its inflated world prices for you.

Ministry allays fears on rice stocks
MUSCAT The Ministry of Commerce and Industry dismissed rumours regarding shortage of rice in the local market.

An official in the ministry told Oman Tribune that the unjustified hoarding of such products would be counter-productive.

He warned the consumer against any such rumours. Rice is available in the market at the prices approved by the authority despite rise in rice prices across the world.

He called upon the consumers to depend on information issued only by the competent authorities.

The authority will ensure the supply of foodstuff to meet day-to-day demand in the market. Rice supply in the local market has been doubled due to high demand in recent days, he said. It is likely that the ministry officials would meet the rice importers after confirming that the prices of the commodity have gone up by 70 per cent in the last three weeks. The ministry would discuss with them the reasons behind the record rise in rice prices.

The ministry officials also made field visits to ensure that the shopkeepers are not manipulating the prices.

Several traders and consumers confirmed that there is big demand for rice due to continuous price rise. It has created instability in the local market, they said. Some of them accused the importers of listing high prices to capitalise on the situation. One trader alleged that the importers are behind artificial price rise as they are hoarding rice to keep the prices high.

Gas Imports delayed
In other news, the importation of gas from Qatar has been delayed by several months as Oman couldn’t get its shit together, according to reports today. Dolphin Energy gas supply to Oman delayed This will not be a significant problem, as Oman has plenty of domestic gas capacity in the short-term. Although at the moment the Government's brand new Kauther Gas plant is down, and has been for weeks with some sort of technical problem, my friends in the Ministry of Oil and Gas tell me Oman’s other fields can easily meet the demand. Of course, while the Kauther plant is down, the Omani Government is losing around $5 million a day from lost condensate production apparently. Ouch.

The article’s author doesn’t understand the problem though. The issue is not capacity (the amount of gas that the system can deliver on a given day), but long term volume. Gas is sold and committed years in advance. So while gas can be pumped today, that’s gas you can’t sell in 15 yrs time. It also means that spare capacity at the LNG plants in Sur can’t be utilized. Hopefully that will change when Iranian gas comes along in 8 years or so. Of course, the lack of gas didn't stop them selling super-cheap gas to the Sohar industries... Now here's a set of questions for the press, or perhaps a brave mmember of the Majlis Al Shura, for the appropriate Ministers:
'Excellencies, can you tell us: (1)at what price is gas being imported from Qatar, (2)what is the volume weighted average price of gas being supplied to The Methanol plants, Aluminium smelter, steel smelter and private cement companies? and (3)what is the profit Oman is losing from not having gas available to use our spare capacity at the LNG plants, taking into account both upstream and downstream profits?'
RAS LAFFAN, Qatar: Abu Dhabi-based Dolphin Energy will begin supplying natural gas to Oman in August or September, a few months later than planned as Oman has yet to complete the infrastructure.

"In August or September we expect the gas to come to Oman," Oman Oil Company chief executive Ahmed Al Wahaibi said at the inauguration of the Dolphin gas plant in Qatar.

The Dolphin project linking Qatar's giant North Field with the UAE and Oman was the first cross-border gas project in the Gulf region. It has pumped around two billion cubic feet a day of gas from Qatar to the UAE since February.

Oman is struggling to meet both domestic demand and its gas export commitments.

Dolphin has a contract to supply 200 million cubic feet a day of gas to Oman.

Omani officials said last month they expected gas supplies from Dolphin to start next month.

"There is some issue with the gas compression," said Al Wahaibi. "It is on our side of the pipeline," he said.

A gas compressing unit compresses gas to ease pumping through the pipeline.

Dolphin general manager Ibrahim Al Ansari said the firm was still working on gas metering stations in the UAE. "The gas is there ... on our side we are ready to export."

1 comment:

  1. Hi, Undercover!
    I loved this post and this blog.
    Have a nice weekend


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