Tuesday, May 5, 2009

Oman turns down the Iranian gas deal, starts negotiations with Qatar

It might seem that the cold winds of global ression are starting to bite in Muscat. Reuters story released today by oil and gas magazine Upstream that - surprise surprise - Oman will NOT be paying $12 bln to develop the Iranian Kish gas field right now because of "tight credit markets".

Actually, there are several reasons for this delay.

While Oman's credit is pretty good right now, and there is a load of cash around for the right projects, investing that sort of dosh in Iran is something Oman would prefer to do with someone else's money, with repayments tied to the gas arriving in Oman.

And of course Oman LLC is suffering a significantly reduced income right now, after last years all time record haul due to high oil price (and the solid production gain compared to 2007). So cash for new projects is obviously tighter.

But the real reason for this delay is probably that the Iranians were simply asking waaaay too high a price for the gas. My sources tell me the price being discussed could have worked out at more than US$14/Mscf.

Compare that to the prices being paid by the Sohar industry (rumoured to be about $0.80 to $1 per Mscf). It would have been cheaper for Oman to just re-import their own LNG exports than pay those sort of prices...

Hopefully the Iranians - whose economy is now even deeper in the shit than it was a year ago - will realise what an opportunity they have lost by being so greedy.

Oman are now taking the opportunity to try and get more from the Qataris - and also making sure the Iranians know it by having Oman Gas Company execs telling the wire services.

Oman Gas wants more from Dolphin

State-owned Oman Gas Company is seeking extra gas imports from the United Arab Emirates' Dolphin Energy to meet rising demand in the sultanate, a company official said today.

Dolphin exports 5.5 million cubic metres per day to non-Opec producer Oman, Nasser Rasbi, a technical director with the company told reporters on the sidelines of an industry conference.

"We are in talks with Dolphin to increase imports," Reuters quoted Rasbi as saying. "Oman needs more gas because of demand in power and industrial that are taking more gas...Oman needs additional gas this year or latest next year," he said.

Oman Gas handles about 40% of the country's dry gas distribution, mainly to commercial users, he said. Its suppliers include Petroleum Development Oman (PDO) which supplies the bulk of the gas, Occidental Petroleum and Dolphin.

Renegotiation anyone? After all, it is a buyers market... And a year 'delay' in the Iranian deal might be enough to get Qatar to try and sell a bit more and keep the Iranians out. The Americans I'm sure would be keen to help Oman get gas from Qatar rather than Iran too.

Perhaps Iran was just a stalking horse?

Kish delayed on credit crunch

Oman will delay by at least a year a joint venture with Iran to develop the Kish gas field due to tight finances, an Omani industry source involved in the project said today.

Oman is struggling to fund energy development projects after the financial crisis
made it hard to get credit.

The project to develop the Iranian gas field had a price tag of up to $12 billion that Oman had agreed to fund fully.

"The production from the Kish gas field will not happen in 2012 as planned," the
source told Reuters on condition of anonymity. "The uncertainty of the global financial crunch has forced Oman to put the project on hold for a year." Oman's oil and gas minister said last year the financial crisis would likely impact the country's energy projects and cause delays.

An Omani energy official said last year the Kish development was expected to be signed off in December 2008 and the project would be wholly funded by the Gulf Arab state. A 200 kilometre subsea pipeline from the field, would run from Musandam, near the strategic Strait of Hormuz, to Sohar in Oman. Phase one of the project would transport gas to Oman at a rate of 1 billion cubic feet per day, later rising to 3 Bcfd.

Iran has the world's second-biggest gas reserves but has been slow to develop gas exports and has no LNG facilities, which super cool gas so it can be exported by ship. The Islamic Republic has increasingly turned towards Asia and elsewhere to develop its oil and gas sector as sanctions and US pressure have prevented US and European companies from investing there. But long contract negotiations and poor terms have delayed many of the preliminary gas export deals Iran has signed.
Oman has struggled to keep up with rising domestic gas demand from industry and power generation.


  1. UD, Are you sure it is not because the US is going around sanctioning just about anyone who trades with the Iranians? I know the Indian major Reliance Industries is being hunted by US congressmen on selling Petrol to the Iranians.

  2. Please refer to earlier post, which is now being reported widely in media all over the world, and is also expected to put a spanner in Abu Dhabi's plan to nuclear power. It seems there are other videos as well.
    Please see this link in FT. These sheikhs are so filthy rich and it beats any logic that they will ever direct get involved in torturing a guy and that too for some petty things.

  3. the link

  4. Sorry didn't know where to post.

    An update on that Sarfraz Nawaz Bangalore blast case which ROP was involved with.

    Diaspora cash fed domestic jihad


    More details of the investigation from the Omani side in the article and the names of Omani nationals and their level of involvement.


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