Saturday, April 21, 2012

Omani terrorist arrests in UK. Plus, Government Gas contracts: When you've gott'em by the balls... Twist.

Breaking News: 3 terrorists were nabbed in the UK coming from Oman.

3 Arrested at Heathrow on Suspicions of Terrorism
Published: April 20, 2012
LONDON — Three men have been arrested at Heathrow Airport and held on suspicion of “possessing articles and documents with intent to use them for terrorist purposes overseas,” the police said on Friday.

The suspects, residents of Britain’s second-largest city, Birmingham, were arrested Thursday night as they arrived from Oman. The police did not release their names.

The three, aged 33 to 39, were detained by officers from the West Midlands Counter Terrorism Unit as part of a “preplanned and intelligence-led” operation, the police said, that was not mounted “in response to any immediate threat to public safety.”

They were held under Section 57 of the British Terrorism Act. That law makes it a criminal offense to possess materials that create a “reasonable suspicion” that they are “for a purpose connected with the commission, preparation or instigation of an act of terrorism.”

A police spokeswoman said British officers had traveled to Oman to meet with the authorities there before making the arrests, but she declined to provide further details about the operation or to describe the articles and documents the men possessed.

Oman, a small Arab nation that borders Yemen and Saudi Arabia, has not previously figured significantly in Britain’s long struggle against homegrown groups of Islamic extremists who have roots overseas. Earlier this week the British government rearrested Abu Qatada, a Jordanian-Palestinian militant preacher accused of being one of Al Qaeda’s leaders in Europe, and said it would resume efforts to deport him.

A couple of other interesting news items over the past few days.

Potential for Shale Gas in Oman?The Ministry of Oil and Gas was touting Oman's potential for the new 'unconventional' shale gas (& oil) plays that are all the rage in the global oil market [a big 'thank you' to the good ol' USA for figuring that out for us, BTW].

It follows the recent expro on Oil and Gas held in Oman last week. Read all about it in the Oman Observer in a press release by His Excellency, Nasser bin Khamis al Jashmi, Under-Secretary, Ministry of Oil & Gas. The Government is desperate for gas, having over built LNG capacity and given away large amounts in gas contracts to stimulate associated industry in Sohar and Salalah. Oxy got the Mukhaisna oil field project mainly because it could bring gas for steam from Qatar, via its Dolphin project.

The Observer also had this cracker of a headline:

Oil and gas expo showcases OER tech[sic]

It seems the ace young Hacks reporters at the Government's news agency can't even spell the 3-letter acronym "EOR" correctly [that's Enhanced Oil Recovery chaps, EOR].

Shale Gas. Not cheap, but there could be an awful lot of it in Oman. At a price.

PDO was quoted as having a $20bln spend over the next 5 years, all of which will need to be paid from production sales. Not included in that cost is the vast amount of natural gas PDO consumes to get that oil. Steam EOR requires gas fired boilers, even if some are from secondary heat recovery units on power stations. On top of the steam, PDO consumes about 700 mega-watts of power, all of it generated by gas.

EOR and fraccing all this unconventional gas and oil is very expensive. Hell, they can't get that to pay in the USA at $3/MMBTU, and that's a country that can drill and frac holes fast and cheap.

The price of oil may well be high enough for PDO's steam and stuff to more than repay, but a market price for gas in Oman (or the region) doesn't exist!

British Gas walked on Oman's Abu Butabul gas find because the gas price was too low. BP are struggling along with the Khazzan gas field, which may pay at $2.50 in places. But in all this the price of gas is a huge issue.

If only the MONE Ministry of National Economy [now defunct] hadn't gaven away loads of gas Oman's gas to Industrialists at dirt cheap rates! $0.77 per MMBTU to the Indians (and yourselves with a carried 50%) for fertiliser; same $0.80 deal for the Wizard of Oz to make Methanol. Even more generous - non-inflating fixed price contracts too! [see the laments of MC passem]

Thus Oman, with no extra conventional gas and rising internal demand to meet power and water requirements, has 20% shut-in capacity in it's 3 LNG export trains as a result. And Japan is gagging for LNG right now. Oman needs more gas* to liquify and send to the Japanese. But looking for the stuff is expensive. And gas supplies are tight. You can't shut the lights off in Muscat. What to do?

The Minister and his undersecretary suggest Foreign Oil companies come in to Oman and invest risk capital to explore for these shale gas and oil deposits, outside the patch of the dominant player (& majority Omani Government owned) PDO and their infamous and productive 'Block 6' concession (The gas is owned 100% by the Government, by the way). After all, there may be opportunities for these companies to strike it rich if the gas price is high enough, and Oman keeps its promises on tax and other fiscal terms. And Oman would get the gas it craves.

Sounds good! Where do I sign?

* Technical Factoid. Selling Natural Gas is different to oil. Most gas is effectively sold 'in the ground' over a long time period. If Oman could be sure of getting more gas from somewhere else in the future, they could 'swap' this new gas for already developed and sold existing gas. Thus the new gas could be immediately sold using existing capacity for the LNG projects and from PDO, plus that would increase oil [condensate] production as an added bonus!

In Other News
It was reported yeaterday that The Ministry of Oil and Gas has decided to break its gas supply contract with their Indian partners in the Oman Fertiliser Plant, Oman India Fertiliser Company (OMIFCO), a joint venture firm between Oman's state-owned Oman Oil Co (OCC) and Indian co-operative firms KRIBHCO and IFFCO. This is a business originally designed as a way to convert cheap, really cheap, gas into Urea for export to India, and to stimulate nearby business and infrastructure. [for reference, $0.80 per MMBTU is about $5/bbl oil equiv.]

The Urea plant & port has already been built and is working, but any extra gas supplies implied as an option in the Gas Supply contract were quickly cancelled after comissioning.

Since then, Oman has now threatened to turn off the taps altogether unless the Indains agree to pay a lot more for the gas - from $0.77 (constant, no inflation) to $3.00 with inflation added every year. Not withstanding the contract signed by the Government to supply long term gas. Surprise!

Photo: The Minister of Oil and Gas renegotiates a Sovereign Omani Non-renegotiable long-term Gas Supply contract. Go ahead, make his day.

As reported in the The Indian Express

Oman cuts gas price to $1.5 per mmBtu, but with riders
New Delhi, Tue Apr 17 2012, 16:33 hrs

Oman has halved the price at which it will sell natural gas to an Indian fertiliser plant in the Gulf nation to USD 1.5 per mmBtu but has added an annual escalation clause.

Oman, which had previously proposed to raise rates of gas sold to OMIFCO's urea manufacturing facility at Sur to USD 3 per million British thermal unit instead of present price of USD 0.77 per mmBtu, has revised its offer to charge USD 1.5 per mmBtu, sources in know of the development said.

The Gulf nation has also set a rider that gas price would be hiked by USD 0.5 every year till it reaches USD 3 per mmBtu.

Oman India Fertiliser Company (OMIFCO), a joint venture firm between Oman's state-owned Oman Oil Co (OCC) and Indian co-operative firms KRIBHCO and IFFCO, produces about 2 million tonnes of urea a year at Sur for exports to India

Oman had contracted to selling gas to the plant at USD 0.77 per million British thermal unit for 15 years beginning 2005 but mid-way decided to hike rates to USD 3 per mmBtu from January 1, 2012 citing firming up of prices in global market.

"Oman has agreed to cut the price to USD 1.5 per mmBtu from January 1, 2012 and under the new mechanism the rate would be USD 1.5 per mmBtu from January 1, 2012, and then the price would be increased by USD 0.5 per year till it reaches USD 3 per mmBtu," sources said.

Fertiliser Ministry has also proposed to the Cabinet to accept the price increase by Oman as it is much lower than the global rates of natural gas.

"We have sent a proposal to the Cabinet that the hike in gas price be accepted," a senior Fertiliser Ministry official had said.

The Ministry argues that even at USD 3 per mmBtu, the gas supplied by Oman is cheaper than alternative fuel sources. Long term gas supplies in the international market are no less than USD 18 per mmBtu.

The official said Cabinet, which may consider the proposal as early as this week, would decide if India should drag Oman to arbitration for breach of signed gas supply contract.

The ministry believes that Oman may snap gas supplies to the plant once arbitration is initiated the OMIFCO would have to buy fuel from international market during pendency of the suit. IFFCO and KRIBHCO holds a stake of 25 per cent each in OMIFCO, while the rest is with Oman Oil Company.

"We are against the proposal of taking the matter to the International Arbitration Tribunal in London, as this could lead to disruption of supply from Oman," the official said.

OMIFCO ships around two million tonnes of urea, which is its entire production, to India under an agreement the country has with the Oman government.

The Indians initially choked, so the Omanis gave them a special discount for a couple of years, while still immediately doubling the price.


I wonder why the Indians didn't get the contract entered as a Royal Decree, which would make it more difficult to renege upon.

It's also a bit sad the way the Indian press headlines the article as a victory for India (Gas Price halves!). They are getting screwed.

Meh. Yanni. Whallah. What to do? We have no gas! Sorry.

If I were some of the other big industrial gas users: Vail [steel plant - needs lotsa gas], or The Wizard of Oz [2 Methanol plants - needs lotsa clean gas], or Alcoa [Aluminium plant - lotsa gas!], I'd be pretty damn nervous right now. Maybe time to do some lobbying and hire some lawyers.

Is this the start of a resource nationalism trend by stealth? Is the Government's policy to negotiate long term contracts in bad faith?

It does not encourage Foreign investors to bring the capital and expertise into Oman, when the agreed and signed legal, fiscal and contractual terms are held at the whim of the Government.

The business environment is bad enough. Oman's courts are already a minefield for outsiders. Employment law is a micro-managing mess biased toward the Oligarchs. Education is poor. And wasta is a huge tax on SMEs. Infrastructure isn't everything.

Is this what happen's when HM goes on vacation?


  1. cant see any Nationality mentioned regarding the residents of Birmingham who flew in from Oman and became part of "Britain’s long struggle against homegrown groups of Islamic extremists".

    Mine fields and other wasta related issues are huge hurdles in Oman and cripple the man on the streets ability to compete.

    The Brazilian Company, Vale, is presumably delighted they are not (currently) in the same situation the Argentina has placed the Spanish Oil firm YPF and I wonder how worried they as Vale signed a 20-year contract with Majan Electricity to supply the 93 megawatts of electricity a year the complex requires.
    But to continue to sell Gas at a 95% discount against equivalent world market oil prices is not possible especially if Qatar Gas is bought at a higher price would attract ridicule from pundits- a price hike seems long overdue. The Fertilizer plant which is 50% owned by the Oman Government though Oman Oil is still enjoying subsidized gas prices.

  2. Thanks UD for a good scoop after a long time.

    It seems MOG is taking a calculated move to undo its own mistake regarding OMIFCO, since they are sure that there is no alternative for the Indian Company.

    If MOG had done this with UK or USA or European company, it would have got a lot more bad publicity. With India they can get away with it.

    Yes ofcourse it is setting a very bad trend. But globally many other countries have also done this sort of unilateral action to walk away from written contracts.

    BTW don't blame Ministry of National Economy for the gas allotments. You are totally wrong here. These decisions were all taken by MOG only and other Ministries (MOF and MNE) just had to accept it as fait accompli.

    The decision in all probability would have been taken by Energy Council.

    Oman will get gas from Iran, if US continues putting pressure on them.

  3. Priceless. Lets face it social, commercial and business practices and procedures in Oman are not too far of the barmy and fermented madness that afflicts Pakistan and its surrounding countries, and all this despite the luvy-mushy spin that Oman (MoT,ToM etc., etc.) bulimicly generates. Omani's can see it in these others but complete miss it in themselves.

    As has been said before bizz in Oman is never that of a win-win. Its nearly always "I win bro', and err, um, yanni... f*%k you"!


  4. It is easy for anybody to criticize in hindsight.

    Pricing of gas was taken at a time those prices were justified and the idea was to start some value addition in Oman itself and give jobs to Omanis.

    The gas promised to be taken as LNG, by Enron failed and Oman had a problem with selling gas at that time.

    Ofcourse anybody would have added scope for price escalation to cover inflation and other factors which increases cost to supplier, which is standard practice.

  5. OP
    They aren't saying what Nationality the arrested 3 are, just that they flew from Muscat and are UK resident. So lets see.

    TWIS, Anon 2
    The deals were criticised at the time they were being proposed,in detail (so it's not hindsight), but the Government chose to ignore the advice and sell gas they didn't have for fixed cost of production from the big gas fields. Of course this was the gas based industry strategy, but they over-invested.

    Probably the key error was building the 3rd LNG train, then underpricing industrial supply. There wasn't enough gas for both.

    JC & WG
    Thanks. Gas from Iran will be expensive (more than $3 too - even Dolphin is $5) Oman is suffering from not having a real energy policy - power, info and decision making is far too concentrated in the MOG, as they effectively control Oman Oil Co. and mostly PDO & Oman LNG as well.

  6. UD
    Despite moving out from Oman, you are still giving readers lots of news.

    It seems one of the gas fields (Kawther) which initially was expected to bring in lots of additional volume, ultimately fell far below expectations. Even the BTU value (Cetane content) came down substantially. This happens in oil and gas industry. Volume estimation is based on various models which do fail many times.

    You are absolutely right that MOG pushed these decisions too aggressively (in good faith), and you know for Duqm they even thought of going for coal based power plant.

    Price of gas to power producers (IPPs), Sohar Aluminium, Steel Plant etc. can also be questioned? Can Oman go back on it? (I loved your term Wizard of Oz.)

    The moment you came out with the news, Muscat Daily has published the Indian Express news.

  7. Thank you Dragon for putting the gas debacle in its correct context. Oman's lack of any gas policy, let alone a coherent one, is a tragedy. Two quick points to add: one of the reasons for the gas shortage is the certain oil company(let's call them The Crustaceans) overestimating the Omani gas reserves as part of their global reserve inflation.

    Secondly even if there are massive reserves of shale gas in Oman, where is the water going to come from to perform the fracking? New reserves of Omani gas will be expensive to develop and will remain where they are until a proper domestic and export pricing policy is developed. I am not holding my breath.

  8. all the bullshit and false info on this blog !!!
    If there is a shortage of gas why would they go ahead with expanding power plants, factories and duqm ????

    You should make warning that the article and comments are for gossip only.

  9. UD, Thanks for the article!even though you are out of Oman, still you get to share very important news for all of us.

  10. Can anybody on Muscat Confidential make any sense of the reported arrest and subsequent death of a former Muscat English teacher?

    The bizarre thing is that this person is now a celebrity on Punch in the Face Book.

    It's all very odd

    1. Conspiracy TheoristApril 29, 2012 at 2:32 PM

      @ Concerned Parent

      As you say this whole Anthony Solloway story is unusual. Or is it? Google searches reveal nothing except reports of what once was. And it appears that this Anthony Solloway (a former Muscat teacher) set up site attacking his former employers, speakers of Indian English ...and His Majesty. With that in mind rumors of an arrest are not without some possible foundation. And if it hasn't happened yet then I reckon it will pretty damn soon!

    2. Thanks for the information on Anthony Solloway. Elsewhere there is the suggestion that the embassy have covered up his death. very weird!

      Coffin Watcher said...

      I can confirm that Anthony J. Solloway former UAUE teacher and creator of www.hctmuscatsucks had a quiet funeral in the UAE. Nobody was allowed to view the body but the police and soldiers in attendance assured us that these were the remains of Anthony J. Solloway. There were mutterings that we were not allowed to view Solloway's body because it had been beaten horrifically, but this was denied by the uniformed clergyman.
      April 27, 2012 8:38 AM

    3. I notice that Mr Solloway is advertising a book on an Islamophobic hate site!

    4. I see that Anthony Solloway has been punched in the face on Punch in the Face Book an extraordinary number of times. another first for Oman!

    5. @ Jane McFarland

      If you actually go the UAEU University Watch site, they confirm the death of Anthony Solloway and advertize his book as a tribute to his courage.

    6. Concerned ParentMay 8, 2012 at 7:13 AM

      What I find so strange about this whole Anthony Solloway malarky is how information seems to be being controlled. For example there have been several threads on Dave's ESL Cafe which have either been closed or deleted. Is somebody really trying to hide something here as Conspiracy Theorist says?

    7. The UAEU University site that Anthony Solloway advertizes his book on or on which his book is being advertized is so insulting to Islam and Arabs that Mr Solloway is either a very foolish man or a reckless one. If I were in his shoes, I'd contact the site and demand that they remove my book. The fact that this has not happened suggests to my mind that he is in sympathy with the Islamophobic, Arab hating sentiments of the site.

    8. I'm beginning to suspect that this whole Anthony Solloway www.hctmuscatsucks is an attempt to hype Mr. Solloway and his book. Either that or someone is hyping Punch in the face Book! I don't usually give conspiracy theories much credence, but it has been suggested that the proprietor of Punch in the Face Book is none other than Anthony J. Solloway. Notice that Anthony Solloway has now received 124,000 punches! Note too that the site advertises a public punching of Anthony Solloway in Sharjah on May 24th, 2012, from 13:00 – 17:00, at Sharjah Women’s College (HCT).
      This is either hype, or something much more sinister!

    9. This notion of Anthony Solloway's death just being hype rings true to me. He seems to be a devoted self-publicist, carrying out a plethora of online book reviews that exhibit such a poverty of serious thought that they cannot have been made other than to get his name in print. Perhaps irritated visitors to Amazon are finally shouting, 'Enough!'

    10. Wow. These posts about this Anthony Solloway mystery are really food for thought. They show what a shady world expatriate life in the Gulf can be at times. This Solloway ‘case’ reminds me of a suicide by an Indian RAFO sergeant about 25 years ago, which was according tot the bush telegraph a little bit more sinister than that. I wonder if anyone else remembers that case?

    11. @ Old Timer

      Ah, the Sergeant Gill demise! I remember it well. He was allegedly victim of 'Muscat Indian Mafia' retribution. As you imply this Anthony Solloway www.hctmuscatsucks business does show that Gulf expat waters can indeed be troubled at times. I wonder if anything will go down at the reportedly planned public shaming of Anthony Solloway in Sharjah in the next few days. Have Hi FM got onto it yet I wonder! Will they be organizing contests so that folk can win tickets!

    12. I think it's more or less certain that Anthony Solloway must be hyping himself with this Punch in the Facebook notoriety - but what an odd way to be become famous! as Book Reviewer says the man seems to be an attention whore, pure and simple. And I agree with Lucy Birrell that it's an oddball that allows himself to be involved with such an blatant anti-Arab,anti-Moslem website as UAE University Watch. Could he be the twisted mind behind that?

    13. murdered by hong Kong Triads

    14. I knew Anthony Solloway in Hong Kong. He was perhaps the most virulent person fellow teachers, or indeed the Hong Kong School system ever came across. That he now operates an Anti Muslim hate site does not surprise me at all.

    15. Keeping up with AnthonyJuly 7, 2012 at 9:59 PM

      According to the hctsucks website, Anthony Solloway has landed a managerial job ADMC.

      Solloway Agent said...

      I hear that Anthony Solloway's Punch in the Facebook performance (nearly 1/2 million slaps) has won him a top goon squad position at ADMC. Watch out all those rascals on here ribbed him. He'll have a list of names!
      July 7, 2012 1:34 PM

    16. Anthony Solloway is still at at large!
      Alfred Adler said...

      I see Anthony Solloway's site is up and running again. He must be taking a break from writing excruciatingly badly- spelled critiques of educational systems and fat-boy reviews of Al Ain eateries. What a lonely old world it must be for poor friendless Anthony Solloway.But I suppose he has his own, self-created, notoriety on Punch in the Face Book.

    17. Nasser Al KharousiJuly 19, 2012 at 5:27 PM

      I wonder if Anthony Solloway is typical of British in the Gulf? I mean people who are unemployed and probably unemployable in the UK and then pay the country that give them a job back by opening Islamophobic hate sites?

  11. Anon,

    If there is a shortage of gas why would they go ahead with expanding power plants, factories and duqm ????"

    They're gambling that they will get more gas in future, and effectively re-selling gas already 'sold' (allocated under a formal or informal gas supply contract) in 15 yrs time.

    This shortage of long term gas is why they - the Ministry of Oil and Gas - even seriously wanted to go for coal fired power in Duqm. And why we keep flying to Iran on Kish development. And why we're already importing gas from Qatar via Dolphin. And why we've got 20% LNG export capacity unused. And why PDO has installed expensive waste heat recovery units and is looking at generating steam via solar.

    Seems you're the one peddling gossip around here.

  12. The Solloway story is a bunch of hot air - people he pissed off taking revenge. He's obviously not dead.

  13. UD
    I am gossiper anon !

    Are you implying that following projects are a gamble of some sort :
    1. Sohar 2 and Barka 3 power plants ( 1bn )
    2. Expansion of Salalah methanol, Salalah IWPPs ( 1 bn )
    3. Duqm refinary and associated idustries ( 7bn even more )
    4. Sur power plant ( 800mn or something )
    Thats all a gamble of some sort !!

    PDO may have short term techncial diffculties but on long term, there is no shortage of gas.

    What is it you trying to say, that officails at MOG,PDO,MOF and all the professionals planning future gas demand are wrong and some blogger hiden behind internet 1000s of miles away knows the whole truth about gas reserves, production status and future forcasts ???

    Show me the data ! having some spare capacity at OLNG is not evidence of shortage, we already returned cost of plant years ago and living on pure profit even if we run it at 10%.


    1. In simple words, its like building the new highway.

      Did you know that they don't have enough power output in muscat to light the highway? And they use generaters to do so?

      It doesn't mean that building highway is a mistake. It just means that build it was to solve a problem (congested roads), and by the time its built we would've solved its running problem (finding the power to light it up).

      Hope this makes sense.

      Just passing by.

      Btw.. Love the blog.


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