Oman 2019 | ENERGY | B2B

New LPG projects will not only spur Oman's power generation sectors but also further possible uses, creating more value for the Sultanate.

Harib Al Kitani
Oman LNG
Sultan Al Burtmani
Executive Managing Director
Oman Gas Company (OGC)

Can you elaborate on the details of your three-year contract with Petroleum Development Oman (PDO)?

HARIB AL KITANI We signed an agreement with PDO to tap into its experience in the engineering side. We have embarked on several projects in the plant, and one of them is to prepare the plant to receive new gas in the future. Another is to maintain the integrity and reliability of the plant. We are operating as an island, producing our own water and power, so we want to replace inefficient technology with state-of-the-art technology to increase performance. We discussed collaborating with PDO to share knowledge and utilize its huge base of procurement contract engineers. We exchange staff and tap into its CPL databank to find out what contractors and strategies it uses, and we provide it with similar knowledge when needed. Such cooperation is needed in the industry, not only in Oman, but everywhere. We cooperate in other areas as well; PDO has come a long way in optimization and Lean initiatives. The agreement has been extremely useful to us.

What is the significance of OGC's LPG project in Salalah for the company and the Omani LPG industry?

SULTAN AL BURTMANI Salalah LPG is OGC's first non-network project and its first gas processing facility. Within the processing facility, we will extract propane and butane from the rich gas, which is readily available in Oman. In the beginning, we will produce 300,000 tons of propane and butane per annum. The goal is for almost 90% of this to be for the international market and 10% for the local market, in particular Salalah. However, we expect the local market portion to expand as downstream capabilities develop. By YE2020, commercial operations will begin. The project is the biggest and the first true investment in gas that is value creating. Rather than just using natural gas for power generation, this process uses extraction methods, which expands the possible uses of the input. If this goes well, we will do more extractions of other components in rich gas, which will create further value for the country.

What is Oman LNG's strategy to keep its plant reliably moving forward?

HAK We are always working to keep our plant stable and reliable. We recently received a big quantity of gas from Khazzan, and we are doing many projects to debottleneck our plant and prepare for the future, not just in terms of volume, but also quality. We need to be prepared for such scenarios, preferably by modifying our plant. In the past, we had to increase capacity and change certain equipment to accommodate volume and quality. This will be my focus for the coming two or three years. In addition, now with the government finding new gas, we need to find more ways to process and produce more. In the long term, the government and Oman LNG will need to determine whether new sources of gas will require an expansion of our overall operations by adding more trains to our facilities.

OGC distributes gas to a wide range of industries. Which industries do you see the most growth in?

SAB Previously, growth came from power generation and petrochemical manufacturing industries. In the long term, there will likely be a shift, though all this depends on government policy relating to Oman's energy mix in its power generation. If the government wants to see more renewables, then there will be less growth in gas. If this happens, we could have better utilization of this gas in manufacturing or as LNG for export, which will give greater added value to the country. We see more growth in the manufacturing industry as well with Duqm as a hub for this. We expect great gas consumption from there. If there is a shift to more renewables in the power generation industry, then there will be more gas available for other industries, such as manufacturing. This is what the government seeks to do. Even with LNG, we need to ensure there is proper expansion of our gas network. I do not see this shift to renewables reducing the growth of gas consumption, though the end consumer might change.