What were the main highlights for Oman LNG in 2019, and how do they reflect the strategy for 2020?
The 2019 was challenging but rewarding. First, we achieved 35 million man hours without injuries, which is record-breaking. Second, our production was the highest ever since the start of the company, thanks to our strategic projects and efficiency-driven operation. We have started ambitious projects to increase efficiency and embarked on a gas-engine power project, instead of the open-cycle plant. With our engines just arrived from Europe, we now have nine gas engines. Our new engines, commissioned to start at the end of 2020 or early 2021, will boost our efficiency in power generation from 23% to 46%, making us the first LNG company globally to employ gas engine technology. In addition, we have our plant rejuvenation program to extend our plant's life for another 30 years. We also started producing cargo from the debottlenecking of the plant project, set to be completed by 2021.
How do you expect the demand side of the market to evolve?
In Japan, LNG imports are expected to gradually decrease in the longer term as further nuclear capacity restarts and solar takes some share of energy supply. As such, we compete with the US, Australia, and Qatar, who have increased production. In the meantime, many traders are entering the market and creating confusion with the supply-demand balance and prices. Fortunately, over the last 20 years, we have made strong relationships in the markets and still have clients who prefer to buy directly rather than through traders. On top of that, the China-US trade war and COVID-19 have impacted LNG markets. Therefore, we are currently navigating many risks, while demand from new markets, such as Bangladesh, is not large enough to offset the challenges of East Asia. That being said, we are almost sold out until the end of our concession, while the debottlenecking production is already in the market and receiving a good response.
How do you expect the LNG gas market partnerships to evolve domestically and internationally?
The gas market in Oman is not fully developed, although the government has changed its strategy recently to hedge its risks. Traditionally, the upstream sector had to sell to the government; today, we are expected to use gas to create value-added products and export them, forming an integrated project. We now have gas-to-liquid (GTL) projects with Shell, as well as Total for small-scale LNG bunkering, and more to come with ENI and BP. However, the local market does not pay as well as the international market. LNG usage locally is being developed through Total's small-scale bunkering aimed at developing LNG as fuel for maritime transport. This is a growing sector where LNG provides cleaner and more cost-competitive fuel for shipping; but LNG as fuel for road transport has yet to evolve significantly in many sectors. Locally, we continue to uphold value through building growth opportunities for local organizations leveraging OLNG, such as Oman Shipping Company.
Where do you expect technological upgrades to improve your processes and plans?
Our digital transformation journey will go hand-in-hand with our partner, Shell, and is based on predictive maintenance or predicting when our assets need intervention before they break down. We have obtained thermal predictive data for columns to see when and how the thermal map is changing, giving us foresight on when the process requires change. We are currently doing incident root cause analysis with technology that fast-tracks massive data analysis to enable engineers to pinpoint symptoms and faults faster. We are also looking at automating multiple operations with AI that will enable our staff to focus on different tasks while machines will take care of others. Finally, we continue to adapt our facility's technology to the ever-changing landscape of Oman Gas Grid in order to maximize value. We continue to be agile with upstream development and are preparing ourselves for potential mixed gas blends when upcoming upstream development comes to fruition.