The Sultanate’s total oil reserves stood at around 4,843 million barrels at the end of 2019, approximately 52 million barrels higher compared to the end of 2018. The increase came as a result of evaluation of the existing/new fields and additions from new exploration operations after deducting the quantity produced in 2019.

In the field of gas reserves, about 0.46 trillion cubic feet of gas were added to the Sultanate’s total gas reserves, which stood at about 23.82 trillion cubic feet at the end of 2019, compared to 24.65 trillion cubic feet at the end of 2018 – after deduction of the quantities produced in 2019. Therefore, gas reserves were about 0.84 trillion cubic feet less by the end of 2019 compared to the end of 2018, the Ministry of Oil and Gas said in its 2020 annual briefing here recently.

Oil and Gas Production
The average daily production of oil in 2019 was about 971,000 barrels per day, confirming the Sultanate’s commitment with OPEC countries to reduce production and narrow the gap between supply and demand. The average daily production of natural gas (in addition to gas imported from Dolphin) reached about 128 million cubic meters per day compared to 125 million cubic meters per day in 2018, including 99 million cubic meters of non-associated gas, 23 million cubic meters of associated gas and 5 million cubic meters of gas imported from Dolphin.

Expenditure on Oil & Gas Exploration, Production and Development
The government is making continuous efforts to encourage local and international private sector companies’ joint investments in the oil, gas and electricity sectors in various projects and fields ranging from exploration to development, establishment of gas-based projects, and ancillary services’ projects to support the petroleum industry, and energy projects. The total expenditure on the oil & gas and electricity sectors amounted to about $ 16 billion, compared to $ 15.97 billion in 2018, including 55% towards capital expenditure on activities such as drilling, utilities, etc., and about 45% as operating expenses. The total expenditure on the oil sector was around $ 8.9 billion (compared to $ 8.4 billion in 2018). The total expenditure on the gas sector was about $ 3.1 billion, compared to $ 3.3 billion in 2018. The expenditure on the electricity sector was approximately $ 4.1 billion compared to $ 4.2 billion in 2018.

Strategic Growth Projects
Strategic projects and economic diversification plans in the Sultanate are considered the backbone of sustainable development. Through such projects and plans, the Ministry of Oil & Gas seeks to create promising investment opportunities, attract & expand investments and join hands with partners to benefit from their technical expertise to increase local production and create job opportunities for Omanis.
The most important strategic projects are:
• Salalah LPG Project
The Salalah LPG project is one of the long-term goals to benefit from gas resources and support the gas transportation infrastructure in the Sultanate, with an investment of about US$826 million, of which US$200 million will be spent within the Sultanate towards In-Country Value (ICV) generation. It is estimated that the project’s revenue will reach approximately US$200 million annually through the sale of 300,000 tons per annum of LPG and condensate. The project is currently in the final stages of construction and is scheduled to be completed and export the first shipment of oil condensate in the third quarter of 2020.

• Ghazeer Field Project
The Ghazeer gas field project, which is the second stage of the gas development plan in Block 61, is nearing its final stages. So far, the number of wells that have been drilled at the end of 2019 is about 20, of which 16 have been tested and whose results have shown a production capacity of 480 million cubic feet per day which represents 90-95% of the total agreed volume of gas. As for the gas processing plant – the third train – the completion rate reached 93% in mid-January 2020, 3% ahead of the time plan for the completion of the project. The actual cost of the project by the end of 2019 was about US$ 769 million, which included awarding of six major construction contracts worth about US$ 300 million to Omani companies as part of the ICV initiatives.

• Yibal Khuff Project
The Yibal Khuff project is an integrated development project of the Khuff and Sudair reservoirs for the production of ‘sour’ oil and gas. The project is one of the most technically complex projects in the Sultanate of Oman with an estimated cost of about $2.7 billion. All engineering work has been completed and all equipment has been purchased. The project is expected to contribute to enhancement of the In-Country Value (ICV) with 25% of the procurement done from the Sultanate. The completion rate of the construction works now stands at 90% with the participation of more than 1,000 Omanis. According to the plan, production is expected to start in February/March 2021.

• Rabab Harweel Integrated Project
The Rabab Harweel integrated project, the most expensive upstream project in Oman, was completed and became operational in June 2019, two months ahead of the timeframe for the project’s construction. The project was originally estimated to cost $ 4.7 billion. But it was completed at a significantly lesser cost leading to a saving of more than $ 1 billion.
It is worth noting the project was completed with 50 million man-hours without any LTI and about 1,500 Omanis across competencies worked during the peak stage of the construction phase. Leading to a major contribution to ICV, about 50% of the project’s procurement budget was spent within the Sultanate and the project’s gas compressor provider established the maintenance and repair facilities in the Sultanate.

• Liwa Plastics Industries Complex Project
The Liwa Plastics Industries Complex is one of the transformative manufacturing projects that will contribute to improving and increasing the diversity of downstream industries production by utilizing the final products that are produced from the Sohar Refinery and Aromatics Plant. The project also ensures a better exploitation of the natural gas liquids currently extracted from the supply of natural gas to produce high quality polymer products that meet the needs of the local and international markets. For the first time, the Sultanate will be able to produce polyethylene, a form of plastics, for which there is a growing global demand. As of November 2019, about 97% of the project has been completed. The project will be completed in the third quarter of 2020, at a cost of approximately US$ 6.7 billion.

• Duqm Refinery and Petrochemicals Industries Project
The Duqm Refinery is a joint venture (JV) between OQ and Kuwait Petroleum International Company (KPI). The project, with its strategic location overlooking the shipping lines, is one of the major projects that will benefit the Duqm Special Economic Zone (SEZAD). The refining capacity of the Refinery will reach 230,000 barrels per day when operations start and will produce diesel and aviation fuel, in addition to naphtha and liquefied petroleum gas (LPG).
The project, which will be implemented at a total cost of US$ 5.75 billion, consists of three construction packages. The first package includes the main processing units for crude oil, while the second package includes project services’ facilities. The third package includes external facilities – a dock for exporting and storing products at Port of Duqm and crude oil tanks at Ras Markaz along with an 80 km pipeline linking the tanks to the refinery complex. By the end of December 2019, the overall completion rate in the project stood at 45%. Provided that all the work related to the project is completed, the trial operations of the project are expected to start by the end of 2021.
In June 2019, the Company awarded the front-end engineering design (FEED) contract for the petrochemicals complex in Duqm to the UK based Wood Plc. The scope of work for the petrochemicals complex project includes the technology selection and award of the multiple licensed units for the petrochemical complex in the early stage of FEED. The Petrochemical Industries Complex project in Duqm will contribute to enhancing the added value of the Refinery and provide the infrastructure for the establishment of many industries based on oil derivatives. This project is expected to lead to the growth of many other industrial sectors, enhance the country’s gross domestic product, create job opportunities for Omani youth and achieve many long term economic goals according to Oman Vision 2040, the Sultanate’s vision for economic diversification.

Oil & Gas Agreements

During 2019, five oil and gas exploration and production sharing agreements were signed including for Block 72 with Occidental Oman, for Block 55 with Shell E&P, for Block 77 with ENI BV and BP Oman, and for Block 47 with ENI BV and OQ. The concession agreement for Block 5 with Daleel Petroleum Company was also renewed for 15 years. The costs of these exploration programmes are expected to reach approximately US$ 117 million during the first phase of the total agreements concluded covering activities including seismic surveys, exploration drilling, and geological and geophysical studies.

With regard to offering and marketing oil concession areas in 2019, the Ministry received several bids from oil companies for the concession blocks 58 and 70, out of the six blocks that were marketed during 2019. The Ministry is currently evaluating the bids and negotiating with the companies that offered the best bids. The new agreements are expected to be signed in the first quarter of 2020.

With regard to increasing the Sultanate’s gas production, an agreement was recently signed with Total E&P and PTTEP MENA (jointly bid by the two) for the Block 12, to explore and produce gas with an investment cost of approximately US$ 50 million. The Ministry is in the final stage of signing two agreements with Shell Development Oman, Total E&P and OQ for Blocks 10 and 11 to produce and operate gas in the Sultanate.