Oman unlikely to have additional LNG sales for years

Strong local demand for gas means Oman LNG is unlikely to have additional cargoes of liquefied natural gas for sale for years, the company's chief executive said on Monday.

Oman lacks the gas needed to meet both rapidly rising domestic demand and to fill the LNG facility, which therefore produces below capacity, Oman LNG's chief executive Brian Buckley told reporters on the sidelines of an energy event.

Oman produces only the eight million tonnes per year (tpy) it needs to meet long term supply contracts, he said, three million tonnes below its capacity to ship gas chilled to liquid form for export on specially designed tankers.

With Oman prioritising meeting domestic demand from power plants, industry and the oil industry, there would be no cargoes available for trade in the physical, or spot market, for some time, he said.

Buckley said: "For the next two to five years, spot trade volumes won't be available."

He added: "Up to about a year or two ago, we had some volumes for diverting and trading."

Oman itself imports through a pipeline via the UAE from Qatar. Despite this and rising domestic demand from power plants and a growing economy, Oman would meet its long term contractual commitments to export gas in the form of LNG, he said.

Buckley said: "The government is very firm on that, they will meet contractual commitments. It's a reputational issue for them, they will meet their contracts whatever."

Current contracts would expire in 2024-2025, he said.Oman LNG sent a cargo of LNG to Kuwait last year, he said.

Kuwait imported 11 cargoes of LNG last year after opening a new import facility. The country struggles to meet peak demand for gas for power generation when temperatures soar in the summer and residents crank up air conditioning units.

Domestic demand for gas throughout the Gulf region is growing at around 10 percent per year, Buckley said. The government needed the gas to supply the industries it wants to expand to create employment for a growing population, he said.

Gas was also needed for reinjection in oil wells to maintain pressure and output on Oman's fields, he added.Oman produces LNG from three trains, or production facilities.

Oman LNG is 51 percent owned by the government. Royal Dutch Shell owns 30 percent, while France's Total and Japan's Mitsui also have stakes. (Reuters)